Analyzing Financial Statements PDF Free Download

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  2. How To Analyze Company Financials

FM Unit 2 Lecture Notes - Financial Statement Analysis - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Financial management formula sheet. Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions to earn income in future. These statements include the income statement, balance sheet, statement of cash flows, notes to accounts and a statement of changes in equity (if applicable). Financial statement. Download Financial Statement Template. Download Financial Statement Analysis PDF/ePub, Mobi eBooks by Click Download or Read Online button. Instant access to millions of titles from Our Library and it’s FREE to try! All books are in clear copy here, and all files are secure so don't worry about it. Analyzing Financial Statements PDF Free Download.

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The following are partial financial statements for an industrial firm that you are required to analyze and value. All amounts are in millions of dollars. Income Statement for Fiscal Year 2004 Financial Statement Analysis and Security Valuation 5th Edition Penman Test Bank. Financial Statement Analysis And Security Valuation 5th Edition Solution Manual Today's stock market news and analysis from nasdaqcom, get the latest news and analysis in the stock market today, including national and world stock market news, business news, financial news and more. Comprehensive nclex questions most like.

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Financial Statement Analysis and Security Valuation
Financial Statement Analysis and Security Valuation Penman
Financial Statement Analysis and Security Valuation Penman 5th
Financial Statement Analysis and Security Valuation Penman 5th Test Bank
Financial Statement Analysis and Security Valuation Penman 5th Edition Test Bank

Analyzing Financial Statements PDF Free Download books

Analyzing Financial Statements Pdf free download. software

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Financial Statement Analysis and Security Valuation
Financial Statement Analysis and Security Valuation Penman
Financial Statement Analysis and Security Valuation Penman 5th
Financial Statement Analysis and Security Valuation Penman 5th Test Bank
Financial Statement Analysis and Security Valuation Penman 5th Edition Test Bank

Full file at http://testbankcafe.eu/Test-Bank-for-Financial-Statement-Analysis-and-Security-Valuation-5th-Edition-Penman
TEST NUMBER 1
Question 1 (32 Points) The following are partial financial statements for an industrial firm that you are required to analyze and value. All amounts are in millions of dollars.
Income Statement for Fiscal Year 2004
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_________________________________________________________________
The firm’s statutory tax rate is 35.3%.
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(a.) Supply the missing numbers, A to J. A=
1,036
B=
90
C=
60
D=
1,146
E=
573
F=
500
G=
110
H=
(6)
I=
573
J=
110
(If you are unable to calculate one of these numbers, make a reasonable guess before proceeding to part (b) of the question.)
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To answer the remainder of the questions, prepare the reformulated income statement and balance sheet:
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(b) Calculate the following for 2004. Use beginning of year balance sheet numbers in denominators. (i)
Comprehensive income
Comprehensive income = 110 – 5 + 4 – 6 = 103 NI
(ii)
OCI
Pref. Div.
Core operating income, after tax 129.41
(iii)
Net financial expense, after tax 21.35
(iv)
Return on net operating assets (RNOA) RNOA = 124.35/850 = 14.63%
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(v)
Core return on net operating assets (Core RNOA) Core RNOA =
(vi)
129.41/850 = 15.22%
Net borrowing cost (NBC)
NBC = 21.35/350 = 6.1%
(vii) Free cash flow C–I = = =
OI – NOA 124.35 – (923 – 850) 51.35
(viii) Net payments to debt holders and debt issuers
F
= = =
C–I–d 51.35 – 30 21.35
Also, NFE – NFO = 21.35 – 0 = 21.35
Full file at http://testbankcafe.eu/Test-Bank-for-Financial-Statement-Analysis-and-Security-Valuation-5th-Edition-Penman
(c) Show that the following relation holds for this firm: ROCE = RNOA + (Financial Leverage x Operating Spread) ROCE FLEV 20.6%
= = =
103/500 = 20.6% 350/500 = 0.7 (beginning of 2004) 14.63% + [0.7 × (14.63% - 6.1%)]
(d) Show that the following relation holds for this firm. Use 3% for the short-term borrowing rate. ROOA is return on operating assets. RNOA = ROOA + [Operating Liability Leverage x (ROOA – Short-term Borrowing Rate)] ROOA
=
124.35  (0.03  60) 910
OLLEV
=
60/850 = 0.071
14.63%
=
13.86% + [0.071 × (13.86% - 3.0%)]
= 13.86%
(beginning of 2004)
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(e) Forecast ROCE for 2005 for the case where RNOA is expected to be the same as core RNOA in 2004 and the net borrowing cost is expected to be the same as in 2004.
FLEV, beginning of 2005 = 350/573 = 0.611 ROCE = 15.22% + [0.611 × (15.22 – 6.1)] = 20.79% OR, OI = NFE = CI
923 × 0.1522 350 × 0.061
= =
140.48 21.35 119.03
ROCE = 119.31/573 = 20.79% (f) Value the equity under a forecast that (i) Return on net operating assets in the future will be the same as core RNOA in 2004. (ii) Sales are expected to grow at 4% per year. (iii) Asset turnovers will be the same as in 2004. The required return for operations is 9%.
E V2004
= 573

= 1,721
(0.1522  0.09)  923 1.09 1.04
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(g) Calculate the intrinsic levered price-to-book ratio and enterprise price-to-book and show that the two are related in the following way: Levered P/B = Enterprise P/B + [Financial Leverage × (Enterprise P/B – 1)] NOA V2004
=
1,721 + 350
= 2,071
Levered P/B
=
1,721/573 = 3.00
Enterprise P/B
=
2,071/923 = 2.24
3.00
= 2.24 + [0.611 x (2.24 – 1.0)]
(h) Calculate the intrinsic trailing levered P/E and the trailing enterprise P/E. Show that the two are related in the following way: Levered P/E = Enterprise P/E + [Earnings Leverage × (Enterprise P/E – 1/NBC – 1)]
Levered P/E
 1,721 30 103
=
17.00
Enterprise P/E
 2,071 51.35 124.35
=
17.07
ELEV
 21.35 103
=
0.207
17.00
=
Question 2 (8 points)
17.07 + [0.207 × (17.07 –
1 – 1)] 0.061
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At the end of the fiscal year ending June 30, 2003, Microsoft reported common equity of $64.9 billion on its balance sheet, with $49.0 billion invested in financial assets (in the form of cash equivalents and short term investments) and no financing debt. For fiscal year 2004, the firm reported $7.4 billion in comprehensive income, of which $1.1 billion was after-tax earnings on the financial assets. This month Microsoft is distributing $34 billion of financial assets to shareholders in the form of a special dividend. a. Calculate Microsoft’s return on common equity (ROCE) for 2004.
ROCE = 7.4/64.9 = 11.40%
b. Holding all else constant what would Microsoft’s ROCE be after the payout of $34 billion?
Income statement after payout OI 6.30 NFI (15 × 0.0224) 0.34 Comp. income 6.64 CSE = 64.9 – 34.0 = 30.9 ROCE = 6.64/30.9 = 21.49%
(As before: 7.4 – 1.1 = 6.3) (NFA = 49 – 34 = 15) (Rate of return = 1.1/49 = 0.0224)
Also, with new FLEV of – 0.485, ROCE = 39.62 (– 0.485 × (39.62 – 2.24)) = 21.49%
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c. Would you expect the payout to increase or decrease earnings growth in the future? Why? Increasing leverage always increases expected earnings growth. The payout increases leverage (in this case, it makes the leverage less negative).
a. What effect would you expect the payout to have on the value of a Microsoft share?
The per-share value of the shares will drop by the amount of the dividend per share. [Note: if the payout were via a share repurchase, there would be no effect on per-share value]
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Learn How To Understand and Analyze Financial Statements

Does your prospective customer have the financial strength and liquidity to pay your invoices? Examining their financial statements will give you insights into their credit-worthiness.

Whether you are a credit professional, business owner, or student, this ebook provides a simple explanation of each financial statement and how to analyze the information provided. The ebook includes over 25 images and 30 definitions and ratios and explains:

  • Income Statement
  • Key Income Statement Ratios
  • Common Size Analysis
  • Trend Analysis Interpretation
  • Balance Sheet
  • Liquidity Ratios
  • Financial Strength Measures
  • Cash Flow Statement

How To Analyze Company Financials

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