Gfedu slides FSA

www.gfedu.net Financial Statement Analysis 2017年CFA二级培训项目 讲师：洪波 1-208 www.gfedu.net 师资简介 • • • • 工作职称：金程首席培训师、英国纽卡斯尔大学国际金融分析硕士（优等学位）、CFA（注册 金融分析师）、RFP（注册财务策划师）、香港财经分析师学会会员 教育背景：英国纽卡斯尔大学国际金融分析硕士（优等学位毕业）、上海对外贸易学院商务日 语学士学位 工作背景：12年专业金融培训经验，深悉各类金融资格证书考试重点及行业热点。先后讲授CF A 一级40班次，二级20班次，三级30班次，RFP课程10次，CFRM课程5次等。授课范围广泛， 包括权益投资、固定收益投资、财务报表分析、经济学、衍生品投资、投资组合、资产配置、 个人理财、私募投资、企业估值、债券投资组合管理等，同时也进行客户指定与题的培训。授 课深入浅出，逻辑清晰，备受学员喜爱。拥有丰富金融从业经验，服务亍摩根大通证券研究部 和毕德投资咨询公司，从事行业不公司的分析和研究。在收购兼并等方面为跨国公司提供财务 顾问咨询服务。并为国内中小企业寻找战略投资者和机构投资者提供咨询服务。精通日语，曾 创立并领导日语小组支持东京的投资银行部门和债券市场部门。 服务客户： Areva，Lubrizal，Arkema，International Paper，Johnson Controls，August a、Philips、中国工商银行、中国银行、建设银行、农业银行、杭州银行、兴业证券、南京证 券、湘财证券、兴业银行、杨浦区党校、太平洋保险、泰康人寽、中国人寽、人保资产管理、 中国平安、华夏基金、中邮基金、富国基金、中国再保险、中国进出口银行、中信建投、北京 外经贸大学、安徽省投资集团、阿里巴巴、携程等。 2-208 www.gfedu.net Topic Weightings in CFA Level II Content Session NO Weightings Study Session 1-2 Ethics & Professional Standards 10-15 Study Session Quantitative Methods 5-10 Study Session Economic Analysis 5-10 Study Session 5-6 Financial Statement Analysis Study Session 7-8 Corporate Finance 5-15 Study Session 9-11 Equity Analysis 15-25 Study Session 12-13 Fixed Income Analysis 10-20 Study Session 14 Derivative Investments 5-15 Study Session 15 Alternative Investments 5-10 Study Session 16-17 Portfolio Management 5-10 3-208 15-20 www.gfedu.net Framework  SS5 Intercorporate Investments, Post-Employment and Share-Based F.R.A Compensation, and Multinational Operations • Reading 16 Intercorporate Investments * • Reading 17 Employee  SS6 Quality of Financial Reports and Financial Statement Analysis Compensation: Postretirement • Reading 19 Evaluating Financial and Share-based * • Reading 18 Multinational Reporting Quality Operations * • Reading 20 Integration of FSA Techniques * 4-208 www.gfedu.net Reading 16 Intercorporate Investments 5-208 www.gfedu.net Framework Overview Financial assets Associate Joint ventures Controlling interest investment Effect of the methods Business combination SPE and VIE 6-208 www.gfedu.net Categorization of investment: overview Degree of Influence Typical % Interest Term of investee Treatment – US GAAP Treatment – IFRS    Financial assets No significant Associates Business combination Significant Control 50% Varies N/A Associate Subsidiary N/A Cost or Market HTM; AFS Fair value through P/L（including TS & Designated at FV） Equity Method Acquisition method Joint Ventures Shared control Equity Method (In rare cases, proportionate consolidation)  Percentage of interests held by investors is not the sole criterion of degree of influence Other factors should be considered, such as, involvement in policy and decision making 7-208 www.gfedu.net Financial assets Financial assets:  This classification below only applies to debt or equity investment with no significant influence (percentage of interests < 20%)  HTM only for debt securities  AFS  Fair value through P/L（including TS & Designated at FV）  Debt securities held-to-maturity:     are securities of which a company has the positive intent and ability to hold to maturity This classification applies only to debt securities; it does not apply to equity investments Initial recognition (similar under IFRS and US GAAP)  IFRS: fair value plus transaction costs;  US GAAP: at cost including transaction costs Over the holding period, the discount or premium is amortized 8-208 www.gfedu.net Financial assets  Fair value through profit or loss  Debt and equity held for trading (TS)  are securities acquired for the purpose of selling them in the near term;  Financial assets are stated at fair value at each B/S date;  Both realized and unrealized gain or loss are recognized on I/S;  Designated at fair value  A financial assets is designated regardless the holding intention;  The treatment is similar to that of TS *IFRS 9——the new standards *U.S GAAP is similar to current IFRS 9-208 www.gfedu.net Financial assets  Debt and equity securities available-for-sale (AFS)  Not classified as HTM, TS or designated at fair value;  Financial assets are stated at fair value at each B/S date;  Only realized gain or loss are recognized on I/S,  The unrealized gain or loss are recognized on equity until selling  FX changes  Debt:   US GAAP, all to OCI; IFRS, FX changes into P/L; other changes in fair value into OCI;  Equity:  under both IFRS and US GAAP, all changes in fair value into OCI 10-208 www.gfedu.net The quality of balance sheet  Clear presentation  A company’s financial statements can provide useful indicators of financial or operating risk  While accounting standards specify which items should be included in the balance sheet, they not typically specify how such items must be presented (in determining which line items should be shown separately and which should be aggregated into a single total)  Clarity of presentation allows an analyst to gather relevant information as well as to make comparisons across companies  Clarity should be consisted with information found in notes of financial statements and supplementary disclosures 194-208 www.gfedu.net Sources of information about risk  Several sources of information about the financial, operating, and other risks  Financial statements  High leverage ratios (or, similarly, low coverage ratios) derived from financial statement data can signal financial risk  Highly variable operating cash flows or negative trends in profit margins can signal operating risks  Auditor’s report  An audit opinion(s) can provide some information about reporting risk Notice: an audit opinion relates to historical information and would not provide information on a timely enough basis to be a useful source of information about risk  Notes to financial statements  The notes typically contain information that is useful in understanding a company’s risk For example, both IFRS and US GAAP require specific disclosures about risks related to contingent obligations, pension and post-employment benefits, and financial instrument risks 195-208 www.gfedu.net Sources of information about risk  Management Commentary (MD&A)  MD&A can give users helpful in assessing the company’s risk exposures and approaches to managing risk  SEC from ―NT‖  In the United States, SEC from ―NT‖ is filed when a firm is unable to file required reports in a timely manner Delays in filing are often the result of accounting difficulties (i.e., internal disagreement on an accounting principle or estimate, the lack of adequate financial staff, or the discovery of an accounting fraud) In general, an NT filing is highly likely to signal problems with financial reporting quality  Financial press  The financial press can be a useful source of information about risk when, for example, a financial reporter uncovers financial reporting issues that had not previously been recognized An analyst should undertake additional investigation of any issue identified 196-208 www.gfedu.net Reading 20 Integration of FSA Techniques 197-208 www.gfedu.net The Framework Phase Define the purpose and context Sources of Info     Collect input   Nature of the function; Communication; Institutional guideline FS, other data; Discussion with all parties; Site visits Output        Analyze or interpret the data     results  From step  From step and 198-208 FS; Financial data tables; Completed questionnaire; Adjusted FS; Common-sized FS; Ratios & graphs; Forecasts;  Process data Statement of purpose; Questionnaire; Report’s content; timetable www.gfedu.net The Framework Phase Develop and Sources of Info  communicate conclusions and  Output Analytical results and  Statement of purpose; previous report;  Questionnaire; Institutional guidelines  Report’s content;  timetable  Updated reports; recommendation s Follow up  Periodically updated information 199-208 www.gfedu.net Case 1: the LT Equity Investment  Purpose:  Find out the drivers of financial success;  Assessing the sustainability;  Risks to maintaining the sustainability;  Collect input data  Process & Analyze/Interpret data  Dupont analysis;  Analysis of composition of asset base;  Capital structure analysis;  Segments and allocation of capital analysis;  Examination of accruals;  C/F study;  Decomposition and analysis of the company’s valuation 200-208 www.gfedu.net Case 1: the LT Equity Investment  Dupont analysis  Extended analysis  ROE = (net income/EBT) X (EBT/EBIT) X (EBIT/revenue) X (revenue/total assets) X (total assets/total equity) = [(tax burden) X (interest burden) X (EBIT margin) X (asset turnover) X (financial leverage)  What’s the key to increasing of ROE in years in this case? 201-208 www.gfedu.net Case 1: the LT Equity Investment  Capital structure analysis  The target is de-leverage;  Make it less financial risky;  Segment analysis/Capital allocation  Accruals of earnings quality  Refer to SS 26  CF relations  Decomposition and analysis of Valuation 202-208 www.gfedu.net Case 2: Off-BS leverage from operating lease  Purpose:  Looking for any off-BS leverage impact  Collect input data  PV factor  Process & Analyze/Interpret data  Lease expenses analysis;  Payment analysis;  PV of lease payment is capitalized to recalculate the ratios 203-208 www.gfedu.net Case 3: changes in accounting  Purpose:  Evaluate the impact of changes in consolidation  Collect input data  10-K;  MD&A  Process & Analyze/Interpret data  Add back assets and liabilities;  Then make analysis 204-208 www.gfedu.net Financial reporting quality  The larger proportion of accrual component in the earning, the faster the reversion will occur  Larger proportion——accounting distortions are greater, accrual component of earnings has lower persistence 205-208 www.gfedu.net Financial reporting quality  Measure earning quality - overview  Earning quality refers to earning properties：  Persistence and sustainability  Earnings are decomposed into the accrual component and cash component:  Aggregated accruals = accrual-based earnings – cash earnings  Two approaches to decomposition:  B/S approach;  CF approach  CF approach is preferred because it generates a cleaner measure which is free from the effects of non-cash acquisitions and foreign currency translation adjustment effects 206-208 www.gfedu.net Financial reporting quality  Measure earning quality  Decomposition with B/S approach  Net operating assets (NOA) is the difference between operating assets and operating liabilities:  NOA = (total assets – cash) – (total liabilities – total debt)  Exclude cash and debt as they are essentially discretion free  Aggregated accruals (AA), under B/S approach, refers to the changes in NOA during a fiscal period:  AAB/S = NOA t – NOA t –  Accrual ratio, (AR)B/S = AAB/S /[(NOA t + NOA t – 1)/2]  In order to analyze the sub-components of accrual activity, relevant line of accrued items could be further analyzed with deflated by average NOA  Decomposition with CF approach  AAC/F = NI t – (CFO t + CFI t )  ARC/F = AAC/F /[(NOA t + NOA t – 1)/2]  CFO: current operating piece of cash  CFI: non-current operating piece of cash 207-208 www.gfedu.net It’s not the end but just beginning By training your thoughts to concentrate on the bright side of things, you are more likely to have the incentive to follow through on your goals You are less likely to be held back by negative ideas that might limit your performance 试着训练自己的思想朝好的一面看，这样你就会汲取实现目标的劢 力，而丌会因为消极沉沦停滞丌前。 208-208 ... Reporting Quality Operations * • Reading 20 Integration of FSA Techniques * 4-208 www .gfedu. net Reading 16 Intercorporate Investments 5-208 www .gfedu. net Framework Overview Financial assets Associate... 券、湘财证券、兴业银行、杨浦区党校、太平洋保险、泰康人寽、中国人寽、人保资产管理、 中国平安、华夏基金、中邮基金、富国基金、中国再保险、中国进出口银行、中信建投、北京 外经贸大学、安徽省投资集团、阿里巴巴、携程等。 2-208 www .gfedu. net Topic Weightings in CFA Level II Content Session NO Weightings Study Session 1-2 Ethics... Session 15 Alternative Investments 5-10 Study Session 16-17 Portfolio Management 5-10 3-208 15-20 www .gfedu. net Framework  SS5 Intercorporate Investments, Post-Employment and Share-Based F.R.A Compensation,