Financial Analysis Report (ppt)

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Financial Analysis Report (ppt)

  1. 1. Financial Analysis Using Financial Performance Metrics
  2. 2. Financial Performance Metrics <ul><li>Formerly, “Financial Ratios” </li></ul><ul><li>Relative Basis for Comparison </li></ul><ul><li>Thousands of Potential Metrics </li></ul><ul><ul><li>One Number Divided by Another Number </li></ul></ul><ul><ul><li>Multiple Permutations and Combinations </li></ul></ul><ul><li>Six Major Categories </li></ul><ul><ul><li>Liquidity </li></ul></ul><ul><ul><li>Activity </li></ul></ul><ul><ul><li>Leverage </li></ul></ul><ul><ul><li>Profitability </li></ul></ul><ul><ul><li>Market </li></ul></ul><ul><ul><li>Growth </li></ul></ul><ul><li>Applicable to Historical Information as well as Plan and Outlook Projections </li></ul>
  3. 3. Metric Categories <ul><li>Liquidity Metrics measure the firm’s abilities to meet its maturing short-term obligations. </li></ul><ul><li>Activity Metrics measure how effectively the firm is using its resources. </li></ul><ul><li>Leverage Metrics measure the extent to which the firm has been financed by debt. </li></ul><ul><li>Profitability Metrics measure management’s overall effectiveness in generating “profits.” </li></ul><ul><li>Market Metrics measure the firms’ relationship to the broader Stock Market. </li></ul><ul><li>Growth measures the firm’s ability to maintain its economic position in the growth of the economy and industry. </li></ul>
  4. 4. 1998 Summary Statistics ($ Millions, except per share)
  5. 5. 1998 Normalized Earnings
  6. 6. Commonly Used Financial Ratios: Liquidity
  7. 7. Commonly Used Financial Ratios: Activity
  8. 8. Commonly Used Financial Ratios: Activity (Part 2)
  9. 9. Commonly Used Financial Ratios: Leverage * Capitalization Ratio
  10. 10. Commonly Used Financial Ratios: Profitability
  11. 11. Commonly Used Financial Ratios: Profitability (Part 2) * Net Assets = Total Assets - Non-Debt Current Liabilities
  12. 12. Commonly Used Financial Ratios: Market * Market Capitalization = Stock Price X Shares Outstanding ** Where: P = Stock Price; D = Dividends; t = Time Period
  13. 13. Financial Performance Metric Comparison
  14. 14. DuPont Ratio Analysis
  15. 15. Hershey and Heinz DuPont Analysis
  16. 16. Hershey and Heinz DuPont Analysis
  17. 17. Addendum to DuPont Ratio Analysis
  18. 19. Notes to Accompany 1980 DuPont Analysis Financial or Sustainable Growth Rate is the rate of growth that a firm can experience given no equity is issued (or purchased) and balance sheet/income statement relationships (as reflected in the ratios) are unchanged.
  19. 21. Common Size Income Statement
  20. 22. Total Asset Turnover Analysis
  21. 23. Financial Leverage Analysis
  22. 24. 1998 Net Sales ($ Millions)
  23. 25. 1998 Annual Growth in Net Sales Conagra Heinz Kellogg’s Quaker Oats Nabisco
  24. 26. 1998 Net Sales CAGR* 1994 to 1998 Excludes Interstate Bakeries’ 30.0 1994-1998 CAGR * CAGR: Compound Annual Growth Rate
  25. 27. Net Sales Comparison 1994 to 1998 Industry Average Hershey Foods

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