Professional Documents
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$40,000
$30,000
$20,000
$10,000
$0
2007 2008 2009 2010
Fiscal Year
($ millions) 2010 2009 2008 2007
Net sales $65,225 $42,905 $37,491 $24,578
Gross margin 25,684 17,222 13,197 8,152
Net income (NI) 14,013 8,235 6,119 3,495
($ millions)
2010 2009 2008 2007
Cash and marketable securities
$51,011 $33,992 $24,490 $15,386
Total current assets
41,678 31,555 30,006 21,956
Total assets
75,183 47,501 36,171 24,878
Total current liabilities
20,722 11,506 11,361 9,280
90%
80%
70%
Peripherals and other hardware
40% iPod
Total Mac
30% iPhone & related
20%
10%
0%
2007 2008 2009 2010
Sales Forecast
Expenses
Gross Profit
Operating Profit
Assets
Liabilities
Cash Flow
Sales Forecast
Expenses
Gross Profit
Operating Profit
Assets
Liabilities
Cash Flow
Sales Forecast
Expenses
Gross Profit
Operating Profit
Assets
Liabilities
Cash Flow
Sales Forecast
Expenses
Gross Profit
Operating Profit
Assets
Liabilities
Cash Flow
Sales Forecast
Forecast
Debt
Expenses
Gross Profit
Forecast
Operating Profit
Forecast
Interest
Cash Flow
Expense
Assets
Liabilities
Forecast
Income and
Taxes Cash Flow
Actual operating profit for 2009 Actual operating profit for 2009
was $15.6 billion. was RMB1.6 billion.
Actual operating profit margin for Actual operating profit margin for
2009 was 25.2%. 2009 was 36.4%.
BAE
Bombardier Systems
Inc. plc
Universe of Stocks
Stocks Meeting
Criteria
Selection
Strategy A Strategy B
Invest in stocks that are Invest in stocks that are
components of a global components of a broad-
equity index, have an ROE based U.S. equity index,
above the median ROE of all have a ratio of price to
stocks in the index, and operating cash flow in the
have a P/E less than the lowest quartile of companies
median P/E. in the index, and have
shown increases in sales for
at least the past three years.
Strategy A Strategy B
Invest in stocks that are Invest in stocks that are
components of a global components of a broad-
based U.S. equity index,
equity index, have an ROE have a ratio of price to
above the median ROE of all operating cash flow in the
stocks in the index, and lowest quartile of companies
have a P/E less than the in the index, and have
median P/E. shown increases in sales for
at least the past three years.
What if Net income was < 0
and Equity < 0? What if operating cash flow
was < 0?
Investments
- Unrealized gains and losses on the income statement
versus
- Unrealized gains and losses not on the income statement
but instead recognized in equity.
If two otherwise comparable companies have significant
differences, it may be useful to adjust.
Company A Company B
(FIFO) (LIFO)
NA = not applicable
Company B
Current assets
(includes inventory) $300,000 $80,000 $100,000
($ millions)
SCHW AMTD
Total stockholders equity $5,073 $3,551
Less goodwill $528 $2,472
Book value, adjusted $4,545 $1,079
($ millions)
SCHW AMTD
Total stockholders equity $5,073 $3,551
Less goodwill $528 $2,472
Less other intangible assets $23 $1,225
Tangible book value $4,522 ($146)
NM = not meaningful
Copyright 2013 CFA Institute 27
OFF-BALANCE-SHEET FINANCING
Use disclosures to assess a companys financial position as if off-
balance-sheet obligations (e.g., operating leases) were included in its
total liabilities.
Steps:
- Determine present value of future operating lease payments.
- Add present value of future operating lease payments to total debt
and to total assets.
- Adjust expenses to
- Include depreciation expense, interest expense.
- Exclude rent expense.
The adjustments for operating leases essentially treat the transaction
as if the asset subject to the operating lease had been purchased
rather than leased.