A B C D E F G

1
2 Chapter 3
3
4
5 Chapter 3. Model for Analysis of Financial Statem
6
7 INPUT DATA 1; 2002 2001
8 Year-end common stock price $23.00 $26.00
9 Year-end shares outstanding (in millions) 50 50
10 Tax rate 40% 40%
11 After-tax cost of capital 11.0% 10.3%
12 Lease payments $28 N/A
13 Principal payments $20 N/A
14 Tabel 1; Balance Sheets (in millions dollars)
15 Assets selisih
16 Cash and marketable securities $10 $80 -$70
17 Accounts receivable $375 $315 $60
18 Inventories $615 $415 $200
19 Total current assets $1,000 $810 $190
20 Net plant and equipment $1,000 $870 $130
21 Total assets $2,000 $1,680 $320
22 Liabilities and equity
23 Accounts payable $60 $30 $30
24 Notes payable $110 $60 $50
25 Accruals $140 $130 $10
26 Total current liabilities $310 $220 $90
27 Long-term bonds $754 $580 $174
28 Total debt $1,064 $800 $264
29 Preferred stock (400,000 shares) $40 $40 $0
30 Common stock (50,000,000 shares) $130 $130 $0
31 Retained earnings $766 $710 $56
32 Total common equity $896 $840 $56
33 Total liabilities and equity $2,000 $1,680 $320
34 Tabel 2: Income Statements (in millions dollars)
35 Net sales $3,000.0 $2,850.0
36 Operating costs $2,616.2 $2,497.0
37 Earnings before interst, tx,& dep (EBITDA) $383.8 $353.0
38 Depreciation $100.0 $90.0
39 Earnings before interest and taxes (EBIT) $283.8 $263.0
40 Less interest $88.0 $60.0
41 Earnings before taxes (EBT) $195.8 $203.0
42 Taxes (40%) $78.3 $81.2
43 Net Income before preferred dividends $117.5 $121.8
44 Preferred dividends $4.0 $4.0
45 Net Income available to common $113.5 $117.8
46 Common dividends $57.5 $53.0
47 Addition to retained earnings $56.0 $64.8
48 Calculated Data 1 : Calculated Data 2 :
49 Operating Performance & Cash Flows
50 Net operating working capital (NOWC) $800.0 $650.0 Net Cash Flow (NCF)
51 Total operating capital $1,800.0 $1,520.0 Cash Flow PS (CFPS)
52 Net Operating Profit After Taxes (NOPAT) $170.3 $145.2 EVA
53 Net Cash Flow (Net income + Depreciation) $213.5 $207.8 MVA

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54 Operating Cash Flow (OCF) $270.3 $235.2
55 Free Cash Flow (FCF) ($109.7) N/A
56
57
58 Tabel 3 : STATEMENT OF RETAINED EARNINGS Calculated Data 3 :
59 Balance of RE, Dec. 31, 2001 $710.0 Per-share Information
60 Add: Net Income, 2002 $113.5 Earnings per share (EPS)
61 Less: Dividends to common $57.5 Dividends per share (DPS)
62 Balance of RE, Dec. 31, 2002 $766.0 Book value per share (BVPS)
63 Cash flow per share (CFPS)
64 Tabel 4 : 'STATEMENT OF CASH FLOWS Free cash flow per share (FCFPS)
65 Operating Activities 2002 Calculated Data 4:
66 Net Income before preferred dividends $117.5 Ratio
67 Additions (Sources of Cash) $140.0 Liquidity ratios
68 Depreciation and amortization $100.0 Current Ratio
69 Increase in accounts payable $30.0 Asset Management ratios
70 Increase in accruals $10.0 Inventory Turnover
71 Subtractions (Uses of Cash) ($260.0) Days Sales Outstanding
72 Increase in accounts receivable ($60.0) Fixed Asset Turnover
73 Increase in inventories ($200.0) Total Asset Turnover
74 Net cash provided by operating activities ($2.5) Debt Management ratios
75 Long-term investing activities Debt Ratio
76 Cash used to acquire fixed assets $230.0 Times Interest Earned
77 EBITDA Coverage Ratio
78 Financing Activities Profitability ratios
79 Increase in notes payable $50.0 Profit Margin
80 Increase in bonds $174.0 Basic Earning Power
81 Payment of common & preferred dividends ($61.5) Return on Assets
82 Net cash provided by financing activities $162.5 Return on Equity
83 Net decrease in cash & marketable securities $70.0 Market Value ratios
84 Cash and securities at beginning of the year $80.0 Price-to Earnings Ratio
85 Cash and securities at end of the year $10.0 Price-to-Cash Flow Ratio
86 Market-to-Book Ratio
87
88 Allied's ROE Vs. Industry
0.155
89
90 0.15
91
92 0.145
93
94 0.14
RO E

95
0.135
96 Allied Industry
97
0.13
98
99 0.125
100
101 0.12
102
103 0.115
104
105 0.11
106 2001
107 Calculate Data 5 : Equity
ROE = PM X TATO X

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ROE = PM X TATO X
108 Du Pont Analysis Multiplier
109 Allied (2002) 12.67% 3.78% 1.50 2.23
110 Allied (2001) 14.02% 4.13% 1.70 2.00
111 Industry Average 15.00% 5.00% 1.80 1.67
112
113
114 Chapter 9
115
116
117 Chapter 9. Model for evaluating the cost of cap
118
119 COST OF DEBT, kd
120 PROBLEM Calculate Data 6 :
121 B-T kd 10%
A-T kd 6%
122 Tax rate 40%
123
124 COST OF PREFERRED STOCK, kp
125 PROBLEM Calculate Data 7 :
126 Pref. Dividend $10.00
kp 10.26%
127 Pref. Price $97.50
128
129 COE FROM RETAINED EARNINGS, ks
130 Effect of beta on Cost

Cost of Equity
131 The CAPM Approach
0.2
132 ks = krf + (km - krf ) bi
133
134 PROBLEM 0.18
135 Asumsi risk-free rate = 8%, market return = 13%,
136 dan Firm's beta = 0.5, hitung Cost of equity dari RE. 0.16
137 Calculate Data 8 :
138 Risk-free rate 8%
Market return 13% 0.14
139
140 Beta 0.5
141 Cost of equity from RE 10.5% 0.12
142
143 PROBLEM
0.1
144 What if the above firm had a beta of 1.0?
145 Calculate Data 9 :
146 Beta 1.0 0.08
147 Cost of equity from RE 13.0%
148 0.06
149 What if the above firm had a beta of 1.5?
150 Calculate Data 10 :
151 Beta 1.5 0.04
152 Cost of equity from RE 15.5%
153 0.02
154
155
Disini diasumsikan CAPM = COE from RE 0
156 Beta
0 0.5
157
158 THE BOND-YIELD-PLUS-RISK-PREMIUM THE DISCOUNTED CASH FLOW (DCF)
159 APPROACH APPROACH
160 PROBLEM Asumsi DCF =

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161 Calculate Data 11 : PROBLEM
162 Equity RP 4% Calculate Data 12 :
163 Bond yield Cost of equity P0 $23.00
164 Southern Bell 8% 12% D1 $1.24
165 Continental 12% 16% g 8%
166
167
168
169
170 THE COST OF EQUITY OBTAINED BY ISSUING NEW COMMON STOCK
171
172 PROBLEM Calculate Data 13 :
173 P0 $23.00 ks from new common stock
174 D1 $1.24 ks from retained earnings
175 g 8% Additional cost
176 F 10%
177
178 Cost of new common stock dihitung dengan, P 0 - $F.
ks from new common stock
179 $F $2.30
180
181 THE WEIGHTED AVERAGE COST OF CAPITAL (WACC) Dengan CAPM untuk istimasi RISK-ADJUSTED COST O
182 PROBLEM
183 wd 45% A-T kd 6% PROBLEM
184 wp 2% kp 10.26% Risk-free rate
185 ws 53% ks 13.39% Market return
186 Beta
WACC = 10.00%
187 Calculate Data 15 :
188
189 PROBLEM Old beta 1.1
190 % of the firm 80%
New corp. beta
191 Project beta 1.5
192 % of the firm 20%
193 Risk-free rate 8%
New ks
194 Market return 12%
195 Beta 1.18
196
197 PROBLEM Original ks x % of the firm + Project's ks % of the firm
198 12.4% 80% 20.0%
199
200 Calculate Data 19 : Project's ks = (12.7% - 12.4%*0.8)/0.2 =
201
202 PROBLEM
203 Risk-free rate 8% Beta and the Cost of Equity
0.18
204 Market return 12%
Cost of Equity

205 Beta 0.5

0.16
206
207 Calculate Data 19 :
0.14
208
ks 10.0%
209
0.12
210
211 Tabel dan Garfik beta COF
Beta COE 0.1
212
213 0.00 8%
0.25 9% 0.08
214

0.06

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0.04
 0.1

0.08
A B C D E F G
215 0.50 10%
0.06
216 0.75 11%
217 1.00 12%
0.04
218 1.25 13%
219 1.50 14%
0.02
220 1.75 15%
221 2.00 16%
0
222 Beta
223 0 0.2 0.4 0.6 0.8 1
224
225
226 Chapter 10
227
228
229 Chapter 10. Model for Capital Budgeting Tools
230
231 Expected after-tax
232 net cash flows (CFt)
233 Year (t) Project S Project L 0 1
234 0
235 1
236 2
237 3
238 4 0 1
239
240 Capital Budgeting Decision Criteria
241
242 PAYBACK PERIOD
243 Calculate Data 20 :
244 Project S Time period: 0 1 2 3
245 Cash flow:
246 Cumulative cash flow:
247
248 Calculate Data 21 :
249 Payback: -
250
251 Use Logical "AND" to determine Click fx > Logical > AND > OK to get dialog box.
252 the first positive cumulative CF. Then specify you want TRUE if cumulative CF > 0 but the previous CF < 0.
253 Use Logical IF to find the Payback. There will be one TRUE.
254 Use Statistical Max function to Click fx > Logical > IF > OK. Specify that if true, the payback is
255 display payback. the previous year plus a fraction, if false, then 0.
256 Click fx > Statistical > MAX > OK > and specify range to find Payback.
257 Calculate Data 22 :
258 Alternative calculation: - Alternative: Use nested IF statements to
259 find payback. Fx > Logical > IF > OK, statements.
260
261 Project L Time period: 0 1 2 3
262 Cash flow:
263 Cumulative cash flow:
264
265 Calculate Data 22 : Payback: - Uses IF statement.
266
267 DISCOUNTED PAYBACK PERIOD WACC = 10%
268
269 Project S Time period: 0 1 2 3

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270 Cash flow:
271 Disc. cash flow:
272 Disc. cum. cash flow:
273
274 Calculate Data 23 : Discounted Payback: - Uses IF statement.
275
276 Project L Time period: 0 1 2 3
277 Cash flow:
278 Disc. cash flow:
279 Disc. cum. cash flow:
280
281 Calculate Data 24 : Discounted Payback: - Uses IF statement.
282
283
284 NET PRESENT VALUE (NPV) WACC =
285
286 Project S Time period: 0 1 2 3
287 Cash flow:
288 Disc. cash flow:
289
290 NPV(S) = = Sum disc. CF's. Or = Uses NPV function.
291
292 Project L Time period: 0 1 2 3
293 Cash flow:
294 Disc. cash flow:
295
296 NPV(L) = Calculate Data 26 :
297
298 INTERNAL RATE OF RETURN (IRR)
299
300 Expected after-tax
301 net cash flows (CFt)
302 Year (t) Project S Project L
303 0
304 1
305 2
306 3
307 4
308
309 Calculate Data 28 :
310 IRR S =
311 IRR L =
312
313 MULTIPLE IRRs
314 Project M:
315
316 0 1 2
317
318
319
320 Calculate Data 29 :
321
IRR M 1 =
322
323
324
325

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326
327
328
329
330
331
332
333
334
335 Calculate Data 30 :
336
IRR M 2 =
337
338
339
340 0 1 2
341 Multiple Rates of Return
k = 1.5
342
343 Calculate Data 31 :
344 NPV =
345 Project M: NPV 1
346 k
347
348 0.5
349
350
351 Max. 0
352 -1 0 1 2
353
354 -0.5
355
356
357
-1
358
359
360
-1.5
361
362
363
364 -2
365
366 NPV Profile of Projects S and L
367 500
368
369
370
400
371 Project S
372 WACC
373 Project L
374 300
375
NPV

376
377
200

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 300

NPV
A B C D E F G
200
378
379
380
381 100
382
383 Project L
384 WACC
385 0
386 0 0.02 0.04 0.06 0.08 0.
387
388
389 -100
390
391
392 -200 Cost of capital
393
394
395
396 Expected after-tax
397 net cash flows (CFt) Cash flow
398 Year (t) Project S Project L differential
399 0
400 1
401 2
402 3
403 4
404 NPV S = Calculate Data 32 :
405 NPV L = IRR = Crossover rate =
406 S-L=
407
408 MODIFIED INTERNAL RATE OF RETURN (MIRR)
409
410 WACC = 10%
411 Project S
412 10%
413 0 1 2 3 4
414
415
416 Calculate Data 33 : MIRRS =
417
418 Project L
419
420 0 1 2 3 4
421
422
423
424
425 PV: 0 Terminal Value:
426
427 Calculate Data 33 : MIRRL =
428
429 Project S
430 WACC =
431 0 1 2 3 4
432
433

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434
435 Calculate Data 34 :
436 PV outflows Terminal Value:
437 PV of TV
438 NPV Thus, we see that the NPV is consistent with reinvestment at WACC.
439
440 Now repeat the process using the IRR, which is G118 as the discount rate.
441
442 Project S
443 IRR = 0.00%
444 0 1 2 3 4
445
446
447
448 Calculate Data 35 :
449 PV outflows Terminal Value:
450 PV of TV Thus, if compounding is at the IRR, NPV is zero. Since the
451 NPV definition of IRR is the rate at which NPV = 0, this demonstrates
452 that the IRR assumes reinvestment at the IRR.

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1
2 5/18/2017 8:31
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4
alysis of Financial Statements
5
6
7
8
9
10
11
12
13
14
15 persentae common size 2001 common size 2002
16 -88% 1% 5%
17 19% 19% 19%
18 48% 31% 25%
19 23% 50% 48%
20 15% 50% 52%
21 19% 100% 100%
22
23 100% 2% 0.03
24 83% 4%
25 8% 8%
26 41% 13%
27 30% 35%
28 33% 48%
29 0% 2%
30 0% 8%
31 8% 42%
32 7% 50%
33 19% 100%
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49 2002 2001
50 $213.5 $207.8
51 $4.27 $4.16
52 ($27.68) ($52.8)
53 $254.00 $460.00

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54
55
56
57
58
59 2002 2001
60 $2.27 $2.36
61 $1.15 $1.06
62 $17.92 $16.80
63 $4.27 $4.16
64 ($2.19) N/A
65 2002 2001 Industry
66 Average
67
68 3.23 3.68 4.20
69
70 4.88 6.87 9.00
71 45.63 40.34 36.00
72 3.00 3.28 3.00
73 1.50 1.70 1.80
74
75 53.20% 47.62% 40.00%
76 3.23 4.38 6.00
77 3.03 N/A 4.30
78
79 3.78% 4.13% 5.00%
80 14.19% 15.65% 17.20%
81 5.67% 7.01% 9.00%
82 12.67% 14.02% 15.00%
83
84 10.13 11.04 12.50
85 5.39 6.26 6.80
86 1.28 1.55 1.70
87
ry 88
89
90
91
92
93
94
95
Allied
96 Industry
97
98
99
100
101
102
103
104
105
106 2002
107 Trend Analysis--Graphing

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108 ROE
109 Years Allied Industry
110 2001 14.02% 15.00%
111 2002 12.67% 15.00%
112
113
114 5/18/2017 8:31
115
116
valuating the cost of capital
117
118
119 Tabel ks pada beberapa nilai beta:
120 Beta ks
121
122 0.00 8.0% 8%
123 0.50 10.5% 11%
124 1.00 13.0% 13%
125 1.50 15.5% 16%
126 2.00 18.0% 18%
127
128
129
130
Effect of beta on Cost of Equity
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156 Beta
0.5 1 1.5 2
157
158
159
160 ks = D1/P0 + g.

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161
162
163
164 ks
13.39%
165
166
167
168
169
170
171
172
173 13.99%
174 13.39%
175 0.60%
176
177 Calculate Data 14 :
178
ks from new common stock 13.99%
179
180
untuk istimasi RISK-ADJUSTED
181 COST OF CAPITAL
182
183
184 8% Calculate Data 16 :
185 12%
ks 12.4%
186 1.1
187
188
189
190
1.18
191 Calculate Data 17 :
192
193
12.72%
194 Calculate Data 18 :
195
196
197 = Firm's cost of capital
198 = 12.7%
199
200 14%
201
202
Beta and the Cost of203
Equity
204
205
206
207
208
209
210
211
212
213
214

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215
216
217
218
219
220
221
Beta 222
0.6 0.8 223 1 1.2 1.4 1.6 1.8 2
224
225
226 5/18/2017 8:31
227
228
or Capital Budgeting 229 Tools
230
231 Project S
232
233 2 3 4
234
235
236 Project L
237
238 2 3 4
239
240
241
242
243
244 4
245
246
247
248
249
250
251
mulative CF > 0 but the 252previous CF < 0.
253
cify that if true, the payback
254 is
ar plus a fraction, if false,
255then 0.
> and specify range to256 find Payback.
257
258
259
260
261 4
262
263
264
265
266
267
268
269 4

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270
271
272
273
274
275
276 4
277
278
279
280
281
282
283
284
285
286 4
287
288
289
= Uses NPV function.
290 Calculate Data 25 :
291
292 4
293
294
295
296 Calculate Data 27 :
297
298
299
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325

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326
327
328
329
330
331
332
333
334
335
336
337
338
339
340
Multiple Rates of341
Return
342
343
344
345
346
347
348
349
350
351
1 352
2 3 4 5
353
354
355
356
357
358
359
360
361
362
363
364
365
ofile of Projects366
S and L
367
368
369
370
371
372
373
374
375
376
377

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378
379
380
381
382
383 Project S
384
385
0.06 386
0.08 0.1 0.12 0.14 0.16
387
388
389
390
391
Cost of 392
capital
393
394
395
396
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
414
415
416
417
418
419
420
421
422
423
424
425
426
427
428
429
430
431
432
433

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434 Reinvestment at WACC = 0%
435
436
437
nsistent with reinvestment
438at WACC.
439
440
441
442
443
444
445
446
447 Reinvestment at IRR = 0
448
449
450
ich NPV = 0, this demonstrates
451
452

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