某咨询财务分析CashFlow(英文版).pptx

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1、 Author: Collins QianContributor: Chris Nelson bcCash FlowMarch 1998Copyright 1998 Bain & Company, Inc. bcBOS Copyright 1998 Bain & Company, Inc. 2CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeawaysbcBOS Copyright 1998 Bain & Comp

2、any, Inc. 3CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeawaysbcBOS Copyright 1998 Bain & Company, Inc. 4CU7010598KRA本资料来源本资料来源bcBOS Copyright 1998 Bain & Company, Inc. 5CU7010598KRACash FlowWhat is Cash Flow? Cash flow describes

3、the movement of cash into (sources) and out of (uses) a company.Sources of cashCompanyUses of cash$bcBOS Copyright 1998 Bain & Company, Inc. 6CU7010598KRACash FlowWhy Do We Care About Cash? The market value of a company is equal to the present value of its expected future cash flowsVarious stakehold

4、ers demand cashinvestors demand CASH returnssuppliers and employees require CASH compensationdebtholders demand CASH paymentsAccounting methods can be used to “manage” earnings; CASH is harder to manipulateCash is King!Cash flow is the measure of a companys strategic value.bcBOS Copyright 1998 Bain

5、& Company, Inc. 7CU7010598KRACash FlowEarnings vs. Cash Flow* Some accounting decisions impact earnings, but not cashIn 1988, General Motors made at least four decisions that impacted earnings but not cashEarnings do not equal cash flow.*Earnings are also called after tax profits or net incomeSucces

6、sful high growth companies tend to have high earnings, but low cash flow; successful low growth companies tend to have low earnings, but high cash flowAccounting DecisionExtended useful plant life from 35 to 45 year scheduleChanged the way it accounted for its pension planAdjusted its inventory valu

7、ation policyChanged the residual value assumption for cars it leasedEarnings Impact$790MM$480MM$217MM$270MMCash ImpactNoneNoneNoneNoneTotal:$1,757MMNonebcBOS Copyright 1998 Bain & Company, Inc. 8CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerc

8、iseKey takeawaysbcBOS Copyright 1998 Bain & Company, Inc. 9CU7010598KRACash FlowTypes of Cash Flow Net cash flow is equal to the sum of the cash flows from operating, investing, and financing activities.Operating cash flowInvesting cash flowFinancing cash flowAbility of a companys recurring operatio

9、ns to generate cashAbility of a companys investment decisions to generate cashHow a company funds its operationsOperating profitsDecrease in working capitalSale of fixed assetsLong-term issuance of shares Examples of sources:Operating losses Increase in working capitalPurchase of fixed assetsRepayme

10、nt of loans Payment of dividends Examples of uses:bcBOS Copyright 1998 Bain & Company, Inc. 10CU7010598KRACash FlowOperating Cash Flow*Investing activities not related to ongoing operations (such as the purchase or sale of divisions or companies, or investments in unrelated businesses) are not inclu

11、ded in investing cash flow. They are included in financing cash flow.Operating cash flow excludes all cash flows related to a firms capital structurecash generation ability is independent of how a firm is financedIt excludes one-time eventsthese are not related to a firms recurring operationsOperati

12、ng cash flow is used to measure the strategic value of a businessfor company valuations, operating and investing cash flows are used, not financing cash flowBain is usually more interested in operating and investing* cash flow than in financing cash flowOperating cash flow measures the ability of a

13、businesss recurring operations to generate cash.bcBOS Copyright 1998 Bain & Company, Inc. 11CU7010598KRACash FlowInvesting Cash FlowInvestments in ongoing operations - property, plant and equipment - are included in investing cash flowcash is used to replace assets as they wear outif a business is t

14、o grow, additional assets must be acquiredin some cases, the cash used to acquire these assets is generated from the sale of existing noncurrent assetssuch cash inflows, however, seldom cover the entire cost of asset acquisitions. Often times cash flow from operations is used to finance acquisitions

15、, or, failing a positive operating cash flow, external financing is usedPure financing activities are not included in investing cash flow. They are included in financing cash flowpurchase or sale of divisions or companiesinvestments in unrelated businessesInvesting cash flows relating to ongoing ope

16、rations are used as a measure of the strategic value of a business. Those that are purely financing/investment mechanisms are used to evaluate the financial strategy of the businessInvesting cash flow measures the use of a businesss cash for the acquisition of non-current assets.bcBOS Copyright 1998

17、 Bain & Company, Inc. 12CU7010598KRACash FlowFinancing Cash FlowMajor types of financing cash flow include: debt-related transactions8changes in long-term debt8interest income and expenseequity-related transactions8changes in common and preferred stock8dividends8short-term investmentslong-term asset

18、 and liability transactions8purchase or sale of a division or company8changes in long-term liabilitiesFinancing cash flow captures all the non-operating cash changes experienced during the year, and it provides information on how a company is funding its operations.bcBOS Copyright 1998 Bain & Compan

19、y, Inc. 13CU7010598KRACash FlowStatement of Cash FlowsThe SCF is divided into three sections: operating, investing, and financingEach section shows sources and uses of funds for the accounting periodThe SCF shows the amounts fordepreciation and amortizationcapital expenditurestaxes paiddividends pai

20、dIt does not show sources and uses by business unitIt does not provide much detail for example, it does not show capital expenditures by project, nor individual equipment purchasesThe SCF is not a substitute for cash flow analysisThe statement of cash flows (SCF) found in annual reports is a good so

21、urce of data for constructing cash flows, but sometimes it does not have the detail required for the analysis being done.bcBOS Copyright 1998 Bain & Company, Inc. 14CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeawaysbcBOS Copyrigh

22、t 1998 Bain & Company, Inc. 15CU7010598KRACash FlowApplications Bain case teams use cash flow (CF) analysis to value investments/acquisitions, to improve the health of business units, and to help companies manage their portfolios.Valuation (mergers, acquisitions)Business unit analysisPortfolio manag

23、ementWhat is the cash generation potential of an investment/ acquisition?What are we willing to pay (in cash) for that investment/acquisition?How healthy is a business unit?What factors have effected the business units ability to generate cash/value over time?How can the business units cash manageme

24、nt be improved?What is the overall balance of cash users/cash generators in a clients portfolio of businesses?How does this effect the clients overall cash position/outlook?What restructuring can be done to improve this profile?CF = common denominatorCF = measuring stickCF = portfolio toolbcBOS Copy

25、right 1998 Bain & Company, Inc. 16CU7010598KRACash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeawaysbcBOS Copyright 1998 Bain & Company, Inc. 17CU7010598KRACash FlowCash Flow Cookbook*Cash is defined as cash plus marketable securities minus shor

26、t-term notes*I/S = income statement, SCF = statement of cash flows, B/S = balance sheet+/ - +/ - - +/ - =1.Profit before interest and tax (PBIT)2.Depreciation3.Other non-cash expenses/income4.Decrease/increase in working capital (excluding cash)5.Taxes paid6.Tax impact of interest income/expenseOper

27、ating cash flowBain case teams use the following cash flow cookbook: - =7.Capital expendituresInvesting cash flow+/ - +/ - +/ - +/ - - +/ - =8.Interest income/expense9.Tax impact of interest expense/income10. Increase/decrease in long-term debt11. Increase in outstanding stocks/shares12. Dividends13

28、.Changes in other accountsFinancing cash flow14. Reconcile with change in cash* from Balance SheetNet cash flowSource*I/SSCF, B/S and NotesNotesB/SI/S, B/SI/SSCF, B/S and NotesI/SI/SB/SB/SSCF, B/S, and NotesB/S, I/SB/SbcBOS Copyright 1998 Bain & Company, Inc. 18CU7010598KRACash FlowAgenda The import

29、ance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeawaysbcBOS Copyright 1998 Bain & Company, Inc. 19CU7010598KRACash FlowExercise - Background (p. 1)*This exercise is based on The Gillette Companys financial statements in 1996. Since several modifications have been made to

30、 the financial statements, the information provided hereafter should not be used to analyze Gillettes financial performance.Net SalesCost of SalesGross ProfitSG&AProfit from OperationsInterest ExpenseIncome before taxesIncome TaxesNet Income1996$9,697.7MM($3,681.7MM)$6,016.0MM($4,379.7MM)$1,636.3MM(

31、$111.3MM)$1,525.0MM($576.3MM)$948.7MMIncome Statement: The New England Razor Company*Use the following data to calculate the cash flow for The New England Razor Company:bcBOS Copyright 1998 Bain & Company, Inc. 20CU7010598KRACash Flow*Deferred taxes can be a liability account, an asset account, or b

32、oth (as is the case here).AssetsCurrent AssetsCashMarketable securitiesReceivablesInventoriesDeferred income taxes*Prepaid expensesTotal Current AssetsProperty, Plant & EquipmentLiabilities and Stockholders EquityCurrent LiabilitiesLoans payableCurrent portion of Long-Term debtAccounts payable and a

33、ccrued expensesIncome taxes payableTotal Current LiabilitiesLong-Term DebtDeferred Income Taxes*Other Long-Term LiabilitiesDividends PayableStockholders EquityCommon stockAdditional Paid-in CapitalRetained EarningsTreasury stockTotal Stockholders Equity$76.9$7.0$2,724.6$1,358.2$359.3$227.2$4,753.2$5

34、,192.0$9,945.2$656.7$14.5$1,964.9$298.6$2,934.7$1,490.4$298.9$630.2$100.1$671.4$707.0$4,168.7($1,056.2)$4,490.91995$81.6$1.6$2,290.8$1,267.6$246.8$199.3$4,087.7$4,456.6$8,544.3$634.7$26.5$1,609.8$319.4$2,590.4$1,048.4$303.4$635.1$66.7$667.1$574.8$3,704.2 ($1,045.8)$3,900.3$9,945.2$8,544.3Balance She

35、etDecember 31, 1996 and 1995 (in $MM)1996Exercise - Background (p. 2)bcBOS Copyright 1998 Bain & Company, Inc. 21CU7010598KRACash Flow Property, Plant and EquipmentLess accumulated depreciationNet Property, Plant, and Equipment1996 (in $MM)$7,820.4$2,628.4$5,192.01995 (in $MM)$6,885.0$2,428.4$4,456.

36、6Note 1: Property, Plant and EquipmentNote 2: DividendsThe company declared dividends of $484.2MM in 1996Note 3: Sale of assetsA loss of $22MM was incurred on equipment sold during the yearThe equipment had an original cost of $244.0MM and was sold for $40.9MMExercise - Background (p. 3)Notes to the

37、 financial statements are a critical source of information.bcBOS Copyright 1998 Bain & Company, Inc. 22CU7010598KRACash FlowOperating Cash Flow*Cash is defined as cash plus marketable securities minus short-term notes*I/S = income statement, SCF = statement of cash flows, B/S = balance sheet+/ - +/

38、- - +/ - =1.Profit before interest and tax (PBIT)2.Depreciation3.Other non-cash expenses/income4.Decrease/increase in working capital (excluding cash)5.Taxes paid6.Tax impact of interest income/expenseOperating cash flow - =7.Capital expendituresInvesting cash flow+/ - +/ - +/ - +/ - - +/ - =8.Inter

39、est income/expense9.Tax impact of interest expense/income10.Increase/decrease in long-term debt11. Increase in outstanding stocks/shares12.Dividends13. Changes in other accountsFinancing cash flow14.Reconcile with change in cash* from Balance SheetNet cash flowSource*I/SSCF, B/S and NotesNotesB/SI/S

40、, B/SI/SI/SI/SB/SB/SB/S, I/SB/SSCF, B/S and NotesSCF, B/S and NotesbcBOS Copyright 1998 Bain & Company, Inc. 23CU7010598KRACash FlowStep 1 - Profit Before Interest and TaxWhere to find:Process:Comments:Income statementIt can be labeled in many different ways, including profit before interest and tax

41、, profit from operations, operating profit, and earnings before interest and taxIf income statement is provided, pick number from income statementIf income statement is not provided, calculate profit before interest and tax:Profit before taxes - Interest income and other income (earned)+ Interest ex

42、pense and other expenses (incurred) - Any one-time gains included in profit before taxes+ Any one-time losses included in profit before taxes= Profit before interest and tax (PBIT)The goal is to get profit before interest payments, tax payments, and extraordinary itemsbcBOS Copyright 1998 Bain & Com

43、pany, Inc. 24CU7010598KRACash FlowStep 1 - Profit Before Interest and Tax - AnswerProfit before interest and tax*:$1,636.3MM1996Operating cash flow begins with profit before interest and tax.*Shown as profit from operations on The New England Razor Companys income statementbcBOS Copyright 1998 Bain

44、& Company, Inc. 25CU7010598KRACash FlowSteps 2 and 3 - Depreciation and Other Non-Cash Income/ExpensesWhere to find:Process:Depreciation - statement of cash flows, or calculate from Balance Sheet and NotesOther Non-Cash Income/Expenses - NotesReview assets and liabilities that are not taken into acc

45、ount in working capital (elements of working capital include current assets and liabilities with the exception of cash, tax items, and financing assets and liabilities (e.g., interest and dividends payable)Ask two questions:was the item non-cash?was the item included in profit before interest and ta

46、x?If the answer to both is yes, adjust profit before interest and taxe.g., depreciation - add back to profit before interest and taxe.g., loss on sale of asset - add back to profit before interest and taxIf answer to either question is no, make no adjustments bcBOS Copyright 1998 Bain & Company, Inc

47、. 26CU7010598KRACash FlowStep 2 - DepreciationWhere to find:Process:Statement of cash flows, or calculate from Balance Sheet and NotesIf depreciation is provided in the statement of cash flows, pick number from thereIf not, calculate depreciation: Accumulated depreciation at year end - Accumulated d

48、epreciation at year beginning+ Depreciation from sale of asset= Depreciation expense for the yearDepreciation from sale of asset: Original cost of asset- Proceeds from sale of asset- Losses incurred= Depreciation from sale of assetbcBOS Copyright 1998 Bain & Company, Inc. 27CU7010598KRA Step 2 - Dep

49、reciation - Answer (p. 1) Depreciation from sale of asset= The original cost of asset - proceeds from sale of asset - losses incurred = $244.0MM - $40.9MM - $22.0MM = $181.1MMDepreciation expense for 1996 = Accumulated depreciation at year end - accumulated depreciation at year beginning + depreciat

50、ion from sale of asset= $2,628.4MM - $2,428.4MM + $181.1MM = $381.1MMCash FlowDepreciation is a non-cash expense. Therefore, it is added to profit before interest and tax in the operating cash flow.bcBOS Copyright 1998 Bain & Company, Inc. 28CU7010598KRACash FlowStep 2 - Depreciation - Answer (p. 2)