Productivity and Profitability Assessment Using Financial Statements (Chapter 2)
Productivity and Profitability Assessment using Financial Statements (chapter 2)
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CONTENTS OSIRIS DATABASE
Consolidated data
Parent company
Subsidiary
Segment data
KEY RATIOS
Return on Shareholders Funds (%) =
=ROE=ProfitsEquity×100
Profit Margin (%)=
=ROS=ProfitsSales×100
Return on Total Assets (%)=
=ROA=ProfitsAssets×100
Current ratio=Current assetsCurrent liabilities
Solvency Ratio (%) =
=Net income+Deprec/AmortNon-current liab.+Current liab.×100
Price Earning Ratio =
=Market capitalisationNet income×100
EBIT = Operating Profits/Losses
EBITDA = EBIT + Depreciation/Amortization
01. CONTENTS INCOME FUND REPORT
Total debt to total capital
Cash flow to total debt
EBITDA interest coverage
ROE
Market capitalization
OPERATING STATISTICS:
Occupancy rate= # nights spent#rooms ×365
Average daily room rate= Revenues#rooms ×365
Revpar= Revenues#rooms
DEFINITION OF ROE AND ROA FOR THE ANALYSIS
FIRM A / FIRM BTOTAL ASSETS / 1000 / 1000
Non Current Liabilities / 600 / 0
Shareholders Funds / 400 / 1000
INCOME STATEMENT / FIRM A / FIRM B
Oper. Rev. / Turn.
Sales / 300 / 300
(-)Costs of Goods Sold / 100 / 100
(=)Operating P/L / 200 / 200
(-)Financial Expenses (10%) / 40 / -
(=)P/L before Tax / 160 / 200
(-)Taxation (30 %) / 48 / 60
(=)P/L for Period / 112 / 140
EXERCISE:
1. Estimate ROE and ROA
2. Estimate the leverage effect
3. Comment the movements from year 1 to year 2
4. Explore the changes needed for year 3 to achieve a ROE of 10%
Year 1 / Year 2TOTAL ASSETS / 1000 / 1500
Non Current Liabilities / 400 / 900
Shareholders Funds / 600 / 600
INCOME STATEMENT / Year 1 / Year 2
Oper. Rev. / Turn.
Sales / 300 / 450
(-)Costs of Goods Sold / 100 / 300
(=)Operating P/L / 200 / 150
(-)Financial Expenses / 40 / 135
(=)P/L before Tax / 160 / 15
(-)Taxation / 48 / 4.5
(=)P/L for Period / 112 / 10.5
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