Spreadsheet for Assessment 2
Should the enterprise value be the same for DCF and Economic Profit?
The spreadsheet below was the uncorrected sheet
This is the corrected sheet with where I made have corrected the Valuation Tab
Billy V Thank you for your help. The formula worked.
Hi Iris, on the Valuation tab, on Cell C34, you seem to have entered the NOA figure which overwrote the formula on the cell that copies it from the Key Value Drivers tab.
To fix up the issue, change the 812486 value in Cell 34C to this formula: =+’Key Value Drivers’!G15
This should make both enterprise value figures match.
Let me know if it doesn’t work.
Apologies, Iris! I gave you the wrong cell reference, it should be cell C30 not C34. If you change the value of C30 on the Valuation tab to the formula I mentioned, it will balance.
Discussion 1 – Sharon Field with Me
Sharon Field shared a link.
My ratio reflections draft is now available 🤔 https://sharonsaccountingdecision.blogspot.com/ I’m interested in comparing airline industries, so if you have an airline your opinions are most welcome🤗✨Thank you
- Iris N Kees Onvlee Hi Sharon although I don’t have an airline I will have a look later today as well. However, considering it is a Chinese company will be interesting to compare the difference between manufacturing and transport industry.
- Sharon Field Thanks for all the awesome comments, I think I’ve replied to everyone on my blog now. I will be reading everyones blog’s and leaving comments tomorrow and over the weekend. I’ve posed some questions and would love a response. There’s some really interesting developments that might assist other people too, not just airline companies…but you’ll have to read my blog to find out!!!😃
- Iris N Kees Onvlee Hi Sharon you might be interested in this article https://tradingeconomics.com/china/gdp-growth-annual
- Sharon Field Iris N Kees Onvlee thank you😀 I think most companies in China are directly influenced by the country as a whole. I’m not sure if that’s an advantage or not. On one hand, it provides incentive to achieve but maybe it stifles growth by restricted creativity.
- Iris N Kees Onvlee It was interesting to note for my side of things that Retail sales rose 8.4 percent year-on-year in the first six months of the year in 2019. However if you look at the forecast graph the GDP Annual Growth is still decreasing.
- Sharon Field Iris N Kees Onvlee hmm I wonder why?
Iris N Kees Onvlee Hi, Sharon, I was having trouble posting to your blog as it was leaving my old blog as person who was providing feedback. Please check your inbox. If you are able to respond to the message that would be greatly appreciated.
FEEDBACK TO SHARON FIELD ABOUT RATIOS
Interesting to see how your sales have been increasing and yet your net profit is decreasing. After further surfing the internet I found this article which may explain your net profit decrease. https://asia.nikkei.com/Business/Companies/China-airline-trio-suffers-first-profit-drop-in-5-years It shows that with the high fuel costs and also the decrease in the Yuan that profits were down. With the grounding of the Boeing 737 Max after recent crashes and authorities asking the domestic carriers to sop using the planes in 2019.
Profit Margin – if any indication of the company having to stop using the Boeing 737 Max and using older airplanes could cause the effect of loss of profit. With high fuel costs, fluctuating tariffs the potential for higher profits is somewhat sombre.
NOA and ATO – Looking at the efficiency ratio here if the company expenses are increasing where were these increases from? This would be where we would analyse how well the company is using its assets and liabilities. I can see that your asset turnover is high and that having a high asset turnover is using its assets effectively.
RNOA – looking at your response in this area and having a low Return on Net Operating Assets looking at why could help. I found that with China Outfitters Holdings Ltd it was due to the company classifying some of their trademark companies as intangible assets with indefinite lives.
You have put a lot of thought into what you have written. You have logically laid out the main point of your discussion. It will be great to see what you have written for Steps 4 & 5. I will finish my evaluation sheet once I have seen the rest of your steps.
Thanks Iris, I really appreciate it
I knew about the grounding of the Boeing Max 8s til 2020 and that they cancelled the contract for 60 odd more to be built. I didn’t think to look at the strength of the yuan or tariff fluctuations. There are some minor connections in the financials indicating some changes in exchange rates, but not so significant. I’m feeling that it is difficult to assess the efficiency of the assets due to the nature of the industry. These are big ticket assets, millions of dollars up-front outlay and millions to maintain and operate, all before one cent of sales has been made. And it kind of has to be that way due to the precious cargo of human life. I’m still struggling to find adequate answers to why the economic profit is staggeringly negative and increasing and why anyone would want to invest – which doesn’t seem to deter CSA from issuing more shares each year. Still lots of questions yet.
Iris N Kees
Thinking about what you have just written once the airplanes are in the air we could think about the landing fees and operating costs of that affect the planes use.
Iris N Kees
Discussion 2 – Evelyn
Evelyn Peltohaka
Key Value Drivers spreadsheet –
Sales, OI, NOA, FCF, Econ Profit, RNOA – 2015 to 2018
Are the figures in the above Key Value Drivers table meant to match with the figures in restated statements and ratios spreadsheets?
- Iris N Kees Onvlee Only the Sales as the OI, NOA, FCF, Economic Profit and RNOA self populate once you have added Sales. Hope this helps.
ACCT13017 - Financial Statement Analysis 