Definition Sandvik Value Added (SVA)

Slides:

Advertisements

Similar presentations

Fin Dr. Menahem Rosenberg1 Financial Statement  The Balance Sheet  The Income Statement  The Statement of Cash Flows  Accounting for Differences.

Advertisements

Financial Statement Analysis

Teton Valley Case Solution Process.

Chapter 3. SALES SALES - Cost of Goods Sold GROSS PROFIT GROSS PROFIT - Operating Expenses OPERATING INCOME (EBIT) OPERATING INCOME (EBIT) - Interest.

Teton Valley Case Free Cash Flows. Free Cash Flow  For each future year you want to calculate:  FCF = EBIT(1 – T c ) (no debt tax shields calculated)

Financial Statements (Ch 2 & 3) The Balance Sheet The Income Statement Taxes Free Cash Flow/Cash Flow From Assets Ratio Analysis Financial Statement (Ch2&3)

Financial Statements and Cash Flows

CHAPTER 17 Financial Planning and Forecasting

Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – WACC components Cost of equity Cost of debt D/E ratio Tax rate.

Ch. 12 Cost of Capital  2002, Prentice Hall, Inc.

Cost of Capital By Prof. Manish B Tardeja. Liabilities & Equity Assets Equity Shares Current assets Preference Shares Long-term debt Fixed assets Fixed.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Analyzing Financial Statements

VANDERBILT INVESTMENT BANKING VANDERBILT INVESTMENT BANKING Meeting 6: Financial Accounting.

Parts of a Financial Statement 1.Statement of Income 2.Balance Sheet 3.Statement of Cash Flow 4.Statement of Stockholders’ Equity.

Ratio Analysis FWhy Conduct Ratio Analysis?  FRatios Are Used To Evaluate:  FClassifications of Ratios:

Cost of Capital Professor Ronald Miolla. Agenda 1) What is Cost of Capital? 2) How to compute Cost of Capital. 3) Cost of debt. 4) Cost of equity.

2-0 Financial Statements, Taxes, and Cash Flow Chapter 2 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Financial Statements, Taxes and Cash Flow1 Financial Statements, Taxes and Cash Flows Financial Statements  Assets Building $190,000 Accumulated Depreciation.

Chapter 02 Financial Statements. 2 Value = FCF 1 FCF 2 FCF ∞ (1 + WACC) 1 (1 + WACC) ∞ (1 + WACC) 2 Free cash flow (FCF) Market interest rates Firm’s.

Sales41,139,44,2 Operating profit3,53,43,0 Percentage of net sales8,78,7 Profit before tax3,43,33,1 Percentage of net sales8,48,4 Profit for the period.

Sales forecast Assets required to support sales Required assets -Existing assets = Required investment Investment Module Total assets > Total liabilities.

13-1 Capital Structure and Leverage Business vs. financial risk Optimal capital structure Operating leverage Capital structure theory.

Fourth Edition 1 Financial Statement Analysis. Fourth Edition 2 Outline 1.Financial statements 1.Income statement and margin analysis 2.Ratio analysis.

1 CHAPTERS 15 & 25 Corporate Valuation and Merger Analysis.

V. STOCKS. L. RATIO ANALYSIS 1.Ratios That Measure Liquidity (the firm’s ability to convert assets into cash) a.Current Ratio = Current Assets Current.

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 19 Financial Statement Analysis.

BASIC APPROACHES TO VALUATION

Financial Statements Income Statements Revenues Revenues Expenses (expired costs) Expenses (expired costs) Timing of recording Timing of recording at time.

Net Sales11,912,7-6,3 % Operating profit0,30,7-57,1 % Percentage of net sales2,55,5 Profit before extraordinary items0,30,8-62,5 % Percentage of net sales2,56,5.

DES Chapter 4 1 DES Chapter 4 Estimating the Value of ACME.

Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen.

BUSINESS VALUATION MODELS Two methods: 1. Discounted Cash Flow 2. Relative Values.

Cost of Capital. n Financial Performance n Time value of money n Stocks and Bonds n Risk and Return n The Investment Decision (Capital Budgeting) (Capital.

Financial Statements and Cash Flow Chapter Financial Cash Flow  In finance, the most important item that can be extracted from financial statements.

Estimating the Value of ACME 1. Steps in a valuation Estimate cost of capital (WACC) – Debt – Equity Project financial statements and FCF Calculate horizon.

Chapter 2 Financial Statements, Cash Flow, and Taxes 1.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Statement Analysis CHAPTER 13.

FINANCIAL STATEMENTS.

Estimating the Value of ACME

Pre – MBA Program Accounting Ratios Nov 11, 2012.

Historical Performance Analysis

Henderson Land Development Company Limited

Financial Statement Analysis

CHAPTER 17 Financial Planning and Forecasting

Chapter 2 Financial Statements, Taxes and Cash Flow

Financial Statement Analysis

Chapter 4 Learning Objectives

A firm which does not pay dividends can be valued by discounting all its FREE CASH FLOWS by its WACC Free Cash Flows = the cash flows actually available.

Follow-up Structure BS & CF

Business Management Mrs. Fischer

Estimating the Value of ACME

Statement of Cash Flows Financial Planning

Styrelsemöte Sandvik AB

Capital Employed Structure

Business Finance Michael Dimond.

Intro to Financial Management

Definition Return on Capital Employed (ROCE)

Definition Price Volume

Financial Statements, Cash Flow, and Taxes

CHAPTER 15 Financial Planning and Forecasting

Teton Valley Case Solution Process.

Preliminary Results 5 March 2008

Procedure Investments Above SEK 500 M

Equity Financing Stock

FIN 360: Corporate Finance

CHAPTER 13 Capital Structure and Leverage

Financial Markets – Fall, 2019 – Oct 17, 2019

Presentation transcript:

Definition Sandvik Value Added (SVA) KA/Group Business Control

Document Information Title: Definition Sandvik Value Added (SVA) Description: Responsible: KA/Anders Östling Valid as of: 1 September 2010 Reviewed: 1 September 2012

Sandvik Value Added (SVA) SVA = EBIT - (WACC x Average Capital Employed) Change in Volume (Growth) Change in EBIT margin (price or cost) Change in Capital employed (lean production) WACC is set by the group, based on risk, equity- and debt financing Growth Sales EBIT Profitability Costs SVA Fixed assets Capital efficiency CE WC WACC

SVA Definition – Actual Quarter EBIT - WACC*(CE OB+CE CB)/2 x 0,25 EBIT = Earnings before interest and taxes, quarter to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities OB = Opening balance, actual quarter CB = Closing balance, actual quarter Weighted CE (W) for one quarter = 0,25 Quarter 2, 3 and 4 SVA for Q2, Q3 and Q4 is calculated as accumulated SVA current period minus accumulated SVA previous quarter

SVA Definition - Actual Year to Date EBIT - WACC*Average CE x W Q1-2 EBIT = Earnings before interest and taxes, year to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2)/3 W = Weighted CE for two quarters = 0,5 Q1-3 Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2 + closing balance Q3)/4 W = Weighted CE for three quarters = 0,75

SVA Definition - Actual Year to Date, Full Year EBIT - WACC*Average CE Q1-4 EBIT = Earnings before interest and taxes, year to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2 + closing balance Q3 + closing balance Q4)/5

SVA Definition - Forecast Year End, FC0 prel. EBIT - WACC*Average CE Forecast 0, preliminary EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB FC Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB=CB FC3 Q4= CB Q3+investments-depreciations+/-change in NWC CB FC Q1= CB FC3 Q4+investments-depreciations+/-change in NWC CB FC Q2= CB FC Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

SVA Definition - Forecast Year End EBIT – WACC*Average CE Forecast 0, definite EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB FC Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB=CB FC3 Q4= CB Q3+investments-depreciations+/-change in NWC CB FC Q1= CB FC3 Q4+investments-depreciations+/-change in NWC CB FC Q2= CB FC Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

SVA Definition - Forecast Year End EBIT – WACC*Average CE Forecast 1 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB FC Q2= CB Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

SVA Definition - Forecast Year End EBIT – WACC*Average CE Forecast 2 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB Q2+CB FC Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB Q2 = Closing balance Q2 CB FC Q3= CB Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

SVA Definition - Forecast Year End EBIT – WACC*Average CE Forecast 3 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB Q2+CB Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB Q2 = Closing balance Q2 CB Q3 = Closing balance Q3 CB FC Q4= CB Q3+investments-depreciations+/-change in NWC

SVA Definition - Forecast Quarter SVA for a single forecasted quarter is calculated as accumulated forecasted SVA for a certain period minus accumulated forecasted SVA for the previous period