Tristan Roger
TD3&4
Financial analysis
Financial analysis – TD3&4
Let us consider the following financial statements of FINA for the years 2017-2021. A series
of exercises that use these financial statements can be found below.
Revenue
Cost of Goods Sold
Gross profit
Sales and Marketing
Administration
Depreciation & Amortization
EBIT
Interest income (Expense)
Pretax income
Income tax
Net income
Shares outstanding (millions)
Earnings per share
Income statement
2017
2018
404.3
363.8
-188.3
-173.8
216
190
-66.7
-66.4
-60.6
-59.1
-27.3
-27
61.4
37.5
-33.7
-32.9
27.7
4.6
-9.7
-1.6
18
3
55
55
0.33
0.05
2019
424.6
-206.2
218.4
-82.8
-59.4
-34.3
41.9
-32.2
9.7
-3.4
6.3
55
0.11
2020
510.7
-246.8
263.9
-102.1
-66.4
-38.4
57
-37.4
19.6
-6.9
12.7
55
0.23
2021
604.1
-293.4
310.7
-120.8
-78.5
-38.6
72.8
-39.4
33.4
-11.7
21.7
55
0.39
Balance sheet
2017
Assets
48.8
88.6
33.7
171.1
2018
2019
2020
2021
68.9
69.8
30.9
169.6
86.3
69.8
28.4
184.5
77.5
76.9
31.7
186.1
85
86.1
35.3
206.4
Net property, plant & equip
Goodwill & Intangibles
Total non-current assets
245.3
361.7
607
243.3
361.7
605
309
361.7
670.7
345.6
361.7
707.3
347
361.7
708.7
TOTAL ASSETS
778.1
774.6
855.2
893.4
915.1
Liabilities & Shareholder's equity
18.7
17.9
6.7
6.4
25.4
24.3
22
7
29
26.8
8.1
34.9
31.7
9.7
41.4
Cash
Accounts receivable
Inventory
Total current assets
Accounts payable
Accrued compensation
Total current liabilities
Long-term debt
Total non-current liabilities
500
500
500
500
575
575
600
600
600
600
TOTAL LIABILITIES
525.4
524.3
604
634.9
641.4
Shareholder's equity
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
252.7
778.1
250.3
774.6
251.2
855.2
258.5
893.4
273.7
915.1
1
Tristan Roger
TD3&4
Financial analysis
Statement of cash flows
2017
2018
Net income
18
3
Depreciation & Amortization
27.3
27
Changes in Accounts receivable
3.9
18.8
Changes in Inventory
-2.9
2.8
Changes in Payables & Accrued compensation
2.2
-1.1
Cash from Operations
48.5
50.5
2019
6.3
34.3
0
2.5
4.7
47.8
2020
12.7
38.4
-7.1
-3.3
5.9
46.6
2021
21.7
38.6
-9.2
-3.6
6.5
54
Capital expenditures
Cash from Investing activities
-100
-100
-75
-75
-40
-40
Dividends paid
Sale (or purchase) of stock
Debt issuance (Pay Down)
Cash from financing activities
-25
-25
-
-5.4
0
-5.4
-25
-25
-
-5.4
0
-5.4
-
-5.4
75
69.6
-
-5.4
25
19.6
-
-6.5
0
-6.5
Change in cash
18.1
20.1
17.4
-8.8
7.5
Stock price
7.92
3.3
5.25
8.71
10.89
Exercise 1
1. What is FINA’s market capitalization at the end of each year?
2. What is FINA’s market-to-book ratio at the end of each year?
3. What is FINA’s enterprise value at the end of each year?
Exercise 2
1. By what percentage did FINA’s revenues grow each year from 2018 to 2021?
2. By what percentage did net income grow each year?
3. Why might the growth rates of revenues and net income differ?
Exercise 3
Suppose FINA repurchases 2 million shares each year from 2018 to 2021.
What would its earnings per share be in 2021? (Assume FINA pays for the shares using its
available cash and that FINA earns no interest on its cash balances).
Exercise 4
Suppose FINA had purchased additional equipment for $12 million at the end of 2018 and this
equipment was depreciated by $4 million per year in 2019, 2020 and 2021.
Given FINA’s tax rate of 35%, what impact would this additional purchase have had on FINA’s
net income in years 2018–2021? (Assume that equipment is paid for out of cash and that FINA
earns no interest on its cash balances.
Exercise 5
Suppose FINA’s costs and expenses had been the same fraction of revenues in 2018-2021 as
they were in 2017 What would FINA’s EPS have been each year in this case?
2
Tristan Roger
TD3&4
Financial analysis
Exercise 6
1. From 2017 to 2021 what was the total cash flow from operations that FINA generated?
2. What fraction of the total in (a) was spent on capital expenditures?
3. What fraction of the total in (a) was spent paying dividends to shareholders?
4. What was FINA’s total retained earnings for this period?
Exercise 7
1. In what year was FINA’s net income the lowest?
2. In what year did FINA need to reduce its cash reserves?
3. Why did FINA need to reduce its cash reserves in a year when net income was reasonably
high?
Exercise 8
Use the data from the balance sheet and cash flow statement in 2017 to determine the following:
1. How much cash did FINA have at the end of 2016?
2. What were FINA’s accounts receivable and inventory at the end of 2016?
3. What were FINA’s total liabilities at the end of 2016?
4. Assuming goodwill and intangibles were equal in 2016 and 2017 what was FINA’s net
property, plant, and equipment at the end of 2016?
Exercise 9
1. What were FINA’s retained earnings each year?
2. Using the data from 2017, what was FINA’s total shareholders’ equity in 2016?
3