... contribution of this book have been to help
make financial/ economic analysisa practical, understandable and usable process
for managersand analysts, and we argue with conviction that applying these con-
cepts ... differentiate between purely financial
analysis on one hand, and economic analysisand trade-offs on the other. As we
mentioned, the first is largely based on financial statements and accounting data,
while ... 18 Financial Analysis: Toolsand Techniques
production, carefully calibrated against quality standards and relative contribution
from products and services, or cost effectiveness standards that...
... 9/27/01 10:57 AM Page 5
10 Financial Analysis: Toolsand Techniques
The Practice of Financial/ Economic Analysis
The financial/ economic analysis sponsored and used by the economic manager
can be viewed ... financial/ economic analysisa practical, understandable and usable process
for managersand analysts, and we argue with conviction that applying these con-
cepts to both established and emerging businesses has ... per-
formance assessment and incentives, and finally to valuation and investor
communication. Each of these areas contains challenges and issues in the practice
of analysisand decision-making that...
... xiii
2 Financial Analysis: Toolsand Techniques
For many years the purpose and contribution of this book have been to help
make financial/ economic analysisa practical, understandable and usable process
for ... familiar with information sources within the company, and works in
close collaboration with financialand other staff persons to make sure that rel-
evant data are at hand for sound analysisand ... professional application enables the user to develop finan-
cial statements, the whole range of key financial measures, and integrated finan-
cial projections and plans, as well as ad hoc financial analyses....
... integrated
conceptual backdrop both for the financial/ economic dimensions of systematic
business management andfor understanding the nature of financial statements,
data, and processes underlying financialanalysis ... they are the basic su-
pervisors of transactions and data collection, sponsors of internal information
and accounting systems, and guardians of financial information. Again we’re
describing a mind ... develop finan-
cial statements, the whole range of key financial measures, and integrated finan-
cial projections and plans, as well as ad hoc financial analyses. The patented
knowledge-based technology...
... purpose and contribution of this book have been to help
make financial/ economic analysisa practical, understandable and usable process
for managersand analysts, and we argue with conviction that applying ... familiar with information sources within the company, and works in
close collaboration with financialand other staff persons to make sure that rel-
evant data are at hand for sound analysisand ... professional application enables the user to develop finan-
cial statements, the whole range of key financial measures, and integrated finan-
cial projections and plans, as well as ad hoc financial analyses....
... Analysis: Toolsand Techniques
For many years the purpose and contribution of this book have been to help
make financial/ economic analysisa practical, understandable and usable process
for managers ... blank.
10 Financial Analysis: Toolsand Techniques
The Practice of Financial/ Economic Analysis
The financial/ economic analysis sponsored and used by the economic manager
can be viewed within a ... professional application enables the user to develop finan-
cial statements, the whole range of key financial measures, and integrated finan-
cial projections and plans, as well as ad hoc financial analyses....
... 2 Financial Analysis: Toolsand Techniques
For many years the purpose and contribution of this book have been to help
make financial/ economic analysisa practical, understandable and usable ... than
availability of tools. We’re talking about a mind set, an organizational climate in
which managersand all employees are encouraged, indeed challenged, to ap-
proach their jobs and the daily ... the basic task and the fundamental challenge—of
financial/ economic analysis lies in constructing and sharing a reasonably consis-
tent and meaningful set of data and relationships that will support...
... 9/27/01 10:57 AM Page 9
10 Financial Analysis: Toolsand Techniques
The Practice of Financial/ Economic Analysis
The financial/ economic analysis sponsored and used by the economic manager
can be viewed ... familiar with information sources within the company, and works in
close collaboration with financialand other staff persons to make sure that rel-
evant data are at hand for sound analysisand judgments. ... per-
formance assessment and incentives, and finally to valuation and investor
communication. Each of these areas contains challenges and issues in the practice
of analysisand decision-making that...
... information.
• Use of comparative data.
• Analysis of financial markets.
Interpretation of financial information essentially amounts to analyzing fi-
nancial statements and other financial data about ... relevant feedback, and provide
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54 Financial Analysis: Toolsand Techniques
rarely can financial data, as generally provided, be used in their exact form ... economic performance and value.
Comparative data are an essential part of financial analysis, as they help put
judgments about a particular company or business in perspective. By implication,
all judgments...
... new capital spending as well as disposals, and the impact of the
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84 Financial Analysis: Toolsand Techniques
acquisitions, accompanied by an increase ... changes that impact the company over a period
of several years. Economic variations and specific industry cycles are generally
long term and not as regular and predictable as seasonal variations. ... 11:00 AM Page 78
This page intentionally left blank.
76 Financial Analysis: Toolsand Techniques
Funds lags during a cyclical upturn or downturn tend to be magnified by a
mostly unavoidable lag...
... on both an an-
nual anda quarterly basis, and are a matter of record whenever a company’s
shares are publicly traded.
A recent requirement by the Financial Accounting Standards Board and the
Securities ... $6,410)
Sales
Average total assets
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136 Financial Analysis: Toolsand Techniques
based on cash flows, and if decisions are consistently analyzed and executed ... 11:07 AM Page 104
142 Financial Analysis: Toolsand Techniques
In the case of physical assets, the depreciation write-off is shown as a
charge in the income statement, and is accumulated on the balance...
... resources
databases
Investment
databases
Operational
databases
Customer
databases
Market
databases
Financing
assumptions
Corporate
financial
database
Past and pro
forma financial
statements
Cash flow
analysis and
projections
Economic
analyses
Performance
analyses
Financial
model
Technology
databases
Logistics
databases
Competitor
databases
Vendor
databases
hel78340_ch05.qxd ... Interrelationships
Shareholder
value
analyses
On-line financial
and economic
databases
Operational
assumptions
Investment
assumptions
Human resources
databases
Investment
databases
Operational
databases
Customer
databases
Market
databases
Financing
assumptions
Corporate ... actual
balance sheet data at the beginning of the forecast period and applying any addi-
tional information we can obtain from management. Fortunately, we have relative
freedom to make and vary our...
... of the plans.
Management can set a variety of financial objectives andfinancial policies
to direct and constrain the company’s planning effort and the specific financial
projections based on ... available financialanalysisand planning
software described in Appendix I, is accompanied by several interactive templates
(TFATemplate under “extras”) for analyzing and displaying different assumptions
for ... more detail in
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210 Financial Analysis: Toolsand Techniques
Chapters 11 and 12, shareholder value creation ultimately is based on cash flows
and market...