phân tích tài chính doanh nghiệp return on invested capital and profitability analysis

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Financial
Statement
Analysis
K R Subramanyam
John J Wild
8-2
8
CHAPTER
Return on Invested Capital and
Profitability Analysis
8-3
Return on Invested Capital
• Joint analysis is where one measure is
assessed relative to another
• Return on invested capital (ROIC) or
Return on Investment (ROI) is an important
joint analysis
• Joint analysis is where one measure is
assessed relative to another
• Return on invested capital (ROIC) or
Return on Investment (ROI) is an important
joint analysis
Importance of Joint Analysis
8-4
Return on Invested Capital
ROI Relation
•
ROI relates income, or other performance measure, to
a company’s level and source of financing

•
ROI allows comparisons with alternative investment
opportunities
•
Riskier investments expected to yield a higher ROI
•
ROI impacts a company’ s ability
to succeed, attract financing,
repay creditors,and reward owners
•
ROI relates income, or other performance measure, to
a company’s level and source of financing
•
ROI allows comparisons with alternative investment
opportunities
•
Riskier investments expected to yield a higher ROI
•
ROI impacts a company’ s ability
to succeed, attract financing,
repay creditors,and reward owners
8-5
Return on Invested Capital
Application of ROI
(2)
measuring
profitability
(3)
Measure for
planning and

control
(1)
measuring
managerial
effectiveness
(2)
measuring
Profitability
(3)
measure for
planning and
control
ROI is applicable to:
8-6
Return on Invested Capital
Measuring Managerial Effectiveness
• Management is
responsible for all
company activities
• ROI is a measure of managerial
effectiveness in business activities
• ROI depends on the skill, resourcefulness,
ingenuity, and motivation of management
• Management is
responsible for all
company activities
• ROI is a measure of managerial
effectiveness in business activities
• ROI depends on the skill, resourcefulness,
ingenuity, and motivation of management

8-7
Return on Invested Capital
Measuring Profitability
• ROI is an indicator of company
profitability
• ROI relates key summary
measures: profits with financing
• ROI conveys return on invested
capital from different financing perspectives
• ROI is an indicator of company
profitability
• ROI relates key summary
measures: profits with financing
• ROI conveys return on invested
capital from different financing perspectives
8-8
Return on Invested Capital
Measuring for Planning and Control
ROI assists managers with:
• Planning
• Budgeting
• Coordinating activities
• Evaluating opportunities
• Control
ROI assists managers with:
• Planning
• Budgeting
• Coordinating activities
• Evaluating opportunities
• Control

8-9
Components of ROI
•
Return on invested capital is defined as:
Income
Invested Capital
8-10
Components of ROI
Invested Capital Defined
• No universal measure
of invested capital
• Different measures of
invested capital reflect
user’s different
perspectives
8-11
Components of ROI
Alternative Measures of Invested Capital
Common Measures:
• Net Operating Assets
• Stockholders’ Equity
8-12
Components of ROI
• Perspective is that of the company
as a whole
• Called return on net
operating assets (RNOA)
RNOA:
 measures operating efficiency/
performance

 reflects return on net operating
assets (excluding financial
assets/liabilities)
• Perspective is that of the company
as a whole
• Called return on net
operating assets (RNOA)
RNOA:
 measures operating efficiency/
performance
 reflects return on net operating
assets (excluding financial
assets/liabilities)
Net Operating Assets
8-13
Components of ROI
Common Equity Capital
• Perspective is that of common
equity holders
• Captures the effect of leverage
(debt) capital on equity holder
return
• Excludes all debt financing and
preferred equity
• Perspective is that of common
equity holders
• Captures the effect of leverage
(debt) capital on equity holder
return
• Excludes all debt financing and

preferred equity
net income less preferred dividends
average common equity
8-14
Components of ROI
Computing Invested Capital
• Usually computed using average
capital available for the period
• Typically add beginning and
ending invested capital amounts
and divide by 2
• More accurate computation is to
average interim amounts
— quarterly or monthly
8-15
Components of ROI
Adjustments to Invested Capital and Income Numbers

Many accounting numbers require
analytical adjustment—see prior chapters

Some numbers not reported in financial
statements need to be included

Such adjustments are necessary for
effective analysis of return on invested
capital

Many accounting numbers require
analytical adjustment—see prior chapters


Some numbers not reported in financial
statements need to be included

Such adjustments are necessary for
effective analysis of return on invested
capital
8-16
Components of ROI
Return on Net Operating Assets RNOA
NOPAT
(Beginning NOA + Ending NOA) / 2
NOPAT
(Beginning NOA + Ending NOA) / 2
Where
•
NOPAT = Operating income x (1- tax rate)
•
NOA = net operating assets
8-17
Components of ROI
BALANCE SHEET
Operating assets
OA
Less operating liabilities (OL)
Net operating assets
NOA
Financial liabilities FL
Less financial assets (FA)
Net financial obligations

NFO
Stockholders’ equity SE
Net financing NFO +
SE
Operating and nonoperating activities - Distinction
8-18
Components of ROI
Return on Common Equity ROCE
Net income - Preferred dividends
(Beginning equity + Ending equity) / 2
Net income - Preferred dividends
(Beginning equity + Ending equity) / 2
Where
•
Equity is stockholder’s equity less preferred
stock
8-19
Analyzing Return on Assets-ROA
Disaggregating RNOA
Return on operating assets =
Operating Profit margin x Operating Asset turnover
NOA Avg.
Sales
Sales
NOPAT
NOA Avg.
NOPAT
×=
Operating Profit margin: measures operating profitability
relative to sales

Operating Asset turnover (utilization): measures effectiveness
in generating sales from operating assets
8-20
Effect of Operating Leverage on RNOA
OA = operating assets
OLLEV = operating liabilities leverage ratio
(operating liabilities / NOA)
8-21
Profit Margin and Asset Turnover
•
Profit margin and asset turnover are
interdependent
–
Profit margin is a function of sales and operating
expenses
•
(selling price x units sold)
–
Turnover is also a function of sales
•
(sales/assets)
8-22
Profit Margin and Asset Turnover
Relation between NOPAT Margin, NOA Turnover, and
Return on Net Operating Assets
8-23
Profit Margin and Asset Turnover
Net operating Asset Turnover v/s
Net operating Profit Margin for Selected Industries
8-24

Analyzing Return on Assets-ROA
8-25
Analyzing Return on Assets-ROA
Disaggregating Profit Margin
Operating profit margin (OPM) =
NOPAT
Sales
Pretax PM = Pretax sales PM + Pretax other PM