贝恩：现金流分析.ppt

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1、 Author:Collins QianContributor:Chris Nelson bcCash FlowMarch 1998Copyright 1998 Bain&Company,Inc.1CU7030298IMBbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways2CU7010598KRAbcBOS Copyright 1998 Bain&Com

2、pany,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways3CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowWhat is Cash Flow?Cash flow describes the movement of cash into(sources)and out of(uses)a company.Sources of cashCompanyUs

3、es of cash$4CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowWhy Do We Care About Cash?The market value of a company is equal to the present value of its expected future cash flowsVarious stakeholders demand cashinvestors demand CASH returnssuppliers and employees require CASH compensation

4、debtholders 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.5CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowEarnings vs.Cash Flow*Some accounting decisions impact earning

5、s,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 incomeSuccessful high growth companies tend to have high earnings,but low cash flow;successful low growth companies

6、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 valuation policyChanged the residual value assumption for cars it leasedEarnings Impact$790MM$480MM$217MM$270MM

7、Cash ImpactNoneNoneNoneNoneTotal:$1,757MMNone6CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways7CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowTypes of Cash Flow Net cash flow is

8、 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 operations to generate cashAbility of a companys investment decisions to generate cashHow a company funds its operationsOpera

9、ting profitsDecrease in working capitalSale of fixed assetsLong-term issuance of shares Examples of sources:Operating losses Increase in working capitalPurchase of fixed assetsRepayment of loans Payment of dividends Examples of uses:8CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowOperati

10、ng 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 included in investing cash flow.They are included in financing cash flow.Operating cash flow excludes all cash flows related to a

11、firms capital structurecash generation ability is independent of how a firm is financedIt excludes one-time eventsthese are not related to a firms recurring operationsOperating cash flow is used to measure the strategic value of a businessfor company valuations,operating and investing cash flows are

12、 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 businesss recurring operations to generate cash.9CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowInvesting Cash FlowIn

13、vestments 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 to grow,additional assets must be acquiredin some cases,the cash used to acquire these assets is generated from the sale of existing noncur

14、rent assetssuch cash inflows,however,seldom cover the entire cost of asset acquisitions.Often times cash flow from operations is used to finance acquisitions,or,failing a positive operating cash flow,external financing is usedPure financing activities are not included in investing cash flow.They are

15、 included in financing cash flowpurchase or sale of divisions or companiesinvestments in unrelated businessesInvesting cash flows relating to ongoing operations are used as a measure of the strategic value of a business.Those that are purely financing/investment mechanisms are used to evaluate the f

16、inancial strategy of the businessInvesting cash flow measures the use of a businesss cash for the acquisition of non-current assets.10CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowFinancing Cash FlowMajor types of financing cash flow include:debt-related transactions8changes in long-ter

17、m debt8interest income and expenseequity-related transactions8changes in common and preferred stock8dividends8short-term investmentslong-term asset and liability transactions8purchase or sale of a division or company8changes in long-term liabilitiesFinancing cash flow captures all the non-operating

18、cash changes experienced during the year,and it provides information on how a company is funding its operations.11CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStatement of Cash FlowsThe SCF is divided into three sections:operating,investing,and financingEach section shows sources and u

19、ses of funds for the accounting periodThe SCF shows the amounts fordepreciation and amortizationcapital expenditurestaxes paiddividends paidIt 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 eq

20、uipment purchasesThe SCF is not a substitute for cash flow analysisThe statement of cash flows(SCF)found in annual reports is a good source of data for constructing cash flows,but sometimes it does not have the detail required for the analysis being done.12CU7010598KRAbcBOS Copyright 1998 Bain&Compa

21、ny,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways13CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowApplications Bain case teams use cash flow(CF)analysis to value investments/acquisitions,to improve the health of business

22、units,and to help companies manage their portfolios.Valuation(mergers,acquisitions)Business unit analysisPortfolio managementWhat 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 facto

23、rs have effected the business units ability to generate cash/value over time?How can the business units cash management 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 restr

24、ucturing can be done to improve this profile?CF=common denominatorCF=measuring stickCF=portfolio tool14CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways15CU7010598KRAbcBOS Copyright 1998 Bai

25、n&Company,Inc.Cash FlowCash Flow Cookbook*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+/-+/-+/-=1.Profit before interest and tax(PBIT)2.Depreciation3.Other non-cash expenses/income4.Decrease/increase in w

26、orking capital(excluding cash)5.Taxes paid6.Tax impact of interest income/expenseOperating 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

27、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,B/SI/SSCF,B/S and NotesI/SI/SB/SB/SSCF,B/S,and NotesB/S,I/SB/S16CU7010598KRAbcBOS Co

28、pyright 1998 Bain&Company,Inc.Cash FlowAgenda The importance of cash flowTypes of cash flowApplicationsCash flow stepsExerciseKey takeaways17CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowExercise-Background(p.1)*This exercise is based on The Gillette Companys financial statements in 199

29、6.Since several modifications have been made to 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$9,697.7M

30、M($3,681.7MM)$6,016.0MM($4,379.7MM)$1,636.3MM($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:18CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash Flow*Deferred taxes can be a

31、liability account,an asset account,or both(as is the case here).AssetsCurrent AssetsCashMarketable securitiesReceivablesInventoriesDeferred income taxes*Prepaid expensesTotal Current AssetsProperty,Plant&EquipmentLiabilities and Stockholders EquityCurrent LiabilitiesLoans payableCurrent portion of L

32、ong-Term debtAccounts payable and accrued 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,

33、724.6$1,358.2$359.3$227.2$4,753.2$5,192.0$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($1,045.8)$

34、3,900.3$9,945.2$8,544.3Balance SheetDecember 31,1996 and 1995(in$MM)1996Exercise-Background(p.2)19CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash 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.

35、0$2,428.4$4,456.6Note 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

36、 the financial statements are a critical source of information.20CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash 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+/-+/-+/-=1.Prof

37、it 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.Interest income/expense9.Tax impact o

38、f 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,B/SI/SI/SI/SB/SB/SB/S,I/SB/SSCF,B/S

39、 and NotesSCF,B/S and Notes21CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash 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,profit from operations,operating profit,and ea

40、rnings 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 expense and other expenses(incurred)-Any one-time gains in

41、cluded 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 items22CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStep 1-Profit Before Interest and

42、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 statement23CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowSteps 2 and 3-Depreciation and Other

43、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 account in working capital(elements of working capital include current assets and liab

44、ilities 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 tax?If the answer to both is yes,adjust profit before interest and taxe.g.,depreciation -a

45、dd 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 24CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStep 2-DepreciationWhere to find:Process:Statement of cash flows,or calcu

46、late 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 depreciation at year beginning+Depreciation from sale of asset=Depreciation expense for the yearDepreciatio

47、n from sale of asset:Original cost of asset-Proceeds from sale of asset-Losses incurred=Depreciation from sale of asset25CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Step 2-Depreciation-Answer(p.1)Depreciation from sale of asset=The original cost of asset -proceeds from sale of asset -losses in

48、curred=$244.0MM-$40.9MM-$22.0MM=$181.1MMDepreciation expense for 1996 =Accumulated depreciation at year end-accumulated depreciation at year beginning+depreciation 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 be

49、fore interest and tax in the operating cash flow.26CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStep 2-Depreciation-Answer(p.2)The depreciation expense for the year can be calculated from the balance sheet and notes.-+=27CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStep 3

50、-Other Non-Cash Expenses-AnswerLoss on equipment sold during the year:$22.0MM (from Note 3)1996Other non-cash expenses are added to profit before interest and tax in the operating cash flow.28CU7010598KRAbcBOS Copyright 1998 Bain&Company,Inc.Cash FlowStep 4-Change in Working Capital(Excluding Cash)W