APPENDIX I: Categories of financial ratios according to different … · 2017-08-07 · due (Gitman...
Transcript of APPENDIX I: Categories of financial ratios according to different … · 2017-08-07 · due (Gitman...
APPENDICES
pertaining to
Voluntary Disclosure of Financial Ratios:
Evidence from Portuguese Listed Companies
Inês de Figueiredo Tavares Batista, No. 2333
6th of January 2017
ii
Table of Contents
APPENDIX I: Categories of financial ratios according to different authors .................................. iii
APPENDIX II: Explanation of methodological issues in the use of financial ratios mentioned by
Lev & Sunder (1979) .............................................................................................................................. v
APPENDIX III: List of companies in the sample, Industry and SuperSector according to the
Industrial Classification Benchmark (ICB) ........................................................................................ vi
APPENDIX IV: Financial ratios found, standardized name and category .................................... vii
APPENDIX V: Pearson’s correlation matrix for company characteristics, p-values and R2 ....... xii
Appendix VI: Average number of ratios according to SuperSector ............................................... xiii
Appendix VII: Descriptive statistics for Size and Ln_Size ............................................................... xiii
Appendix VIII: Descriptive statistics for EFRD ............................................................................... xiii
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APPENDIX I: Categories of financial ratios according to different authors
Though different authors present different groupings and use different terminology, some of
these categories refer to the same types of ratios, as discussed below.
Liquidity ratios measure a company’s ability to meet its short-term obligations as they come
due (Gitman & Zutter, 2012; Weston & Copeland, 1992). The most used liquidity ratios are
the current ratio and the quick ratio. Dun & Bradstreet consider these two ratios as solvency
ratios.
Leverage or debt ratios “measure the degree of protection of suppliers of long-term funds”
(Gibson 2011, p. 187); in other words, they reflect the level of indebtedness of a company and
its ability to repay long-term debt.
Profitability ratios measure a company’s ability in using its resources to generate earnings. In
general, they evaluate the return a company was able to generate with respect to sales, assets
and investment. They typically include profit margins (gross, operating and net profit), Return
on Assets (ROA), Return on Equity (ROE), Return on Investment (ROI) and Return on Sales
(ROS).
What Gitman & Zutter (2012) classify as market ratios and Weston & Copeland (1992) as
valuation ratios correspond to some of the ratios Gibson (2011) considers as “relevant for
investors”. Utilizing the same terminology as Watson et. al (2002), these can be called
investment ratios. Market ratios relate a company’s stock price to different accounting items
and give an indication of how stockholders perceive the company’s performance. The most
widely used market ratios are the price to earnings (P/E) ratio and the market/book (M/B)
ratio. In addition, other ratios are relevant for investors when deciding what companies to
invest in. These are, namely: dividend payout, dividend yield and degree of financial
leverage. Earnings per share (EPS), the only mandatorily disclosed ratio, is considered as an
“investment ratio” by Gibson (2011), but as a profitability ratio by Gitman & Zutter (2012).
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Cash flow ratios can reflect any of the similar information to the previously mentioned
categories and use information from the cash flow statement to do so (namely, operating cash
flow).
Activity ratios “measure how effectively the firm employs the resources at its command”
(Weston & Copeland 1992, p. 183); that is, they measure how efficient a company is at
managing different accounts, which is way they are sometimes also called efficiency ratios.
This include inventory turnover, average collection period, fixed assets turnover and total
assets turnover. Gibson (2011) considers total assets turnover as a profitability ratio.
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APPENDIX II: Explanation of methodological issues in the use of financial ratios
mentioned by Lev & Sunder (1979)
The two main uses of financial ratios are as control for size and as control for industry-wide
factors.
For the first case, they mention how: ratios are only “an adequate instrument for size control
when the variable under examination, y, is strictly proportional to the size of the operation, x”
(Lev & Sunder 1979, p. 190) and the importance of choosing an appropriate measure of size
to avoid ambiguity; how using a variable controlled for size may lead to inaccurate results.
As for the second case, the main issue lies on the fact that the appropriate industry standard to
be used for comparison depends “on the underlying theoretical reasons as to why firms within
the same industry are expected to have similar or dissimilar ratios and, second, on the
distributional properties of financial variables and ratios” (Lev & Sunder, 1979, p. 207).
The problems reside in the fact that theory on these subjects is often scarce and hardly
attainable and, also, that these questions are easily overlooked by users of financial
information.
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APPENDIX III: List of companies in the sample, Industry and SuperSector according to
the Industrial Classification Benchmark (ICB)
Company Industry SuperSector
F. Ramada Investimentos SGPS Basic Materials Basic Resources
Inapa Investimentos Participações e Gestão Basic Materials Basic Resources
Navigator Company Basic Materials Basic Resources
Semapa SGPS Basic Materials Basic Resources
Corticeira Amorim SGPS Consumer Goods Food & Beverage
Sumol+Compal Consumer Goods Food & Beverage
Vista Alegre Atlantis SGPS Consumer Goods Personal & Household Goods
Cofina SGPS Consumer Services Media
Impresa SGPS Consumer Services Media
Media Capital SGPS Consumer Services Media
NOS SGPS Consumer Services Media
Jerónimo Martins SGPS Consumer Services Retail
SAG Gest SGPS Consumer Services Retail
Sonae SGPS Consumer Services Retail
Estoril Sol SGPS Consumer Services Travel & Leisure
FC Porto Futebol SAD Consumer Services Travel & Leisure
Ibersol SGPS Consumer Services Travel & Leisure
SL Benfica Futebol SAD Consumer Services Travel & Leisure
Sporting CP Futebol SAD Consumer Services Travel & Leisure
SONAE capital SGPS Financials Financial Services
Luz Saúde Health Care Health care
Cimpor SGPS Industrials Construction & Materials
Imob. Grão Pará Industrials Construction & Materials
Mota Engil SGPS Industrials Construction & Materials
SDC Investimentos SGPS Industrials Construction & Materials
Sonae Indústria SGPS Industrials Construction & Materials
Teixeira Duarte Industrials Construction & Materials
Altri SGPS Industrials Industrial Goods & Services
CTT Industrials Industrial Goods & Services
Lisgráfica Industrials Industrial Goods & Services
Martifer SGPS Industrials Industrial Goods & Services
Orey Industrials Industrial Goods & Services
Toyota Caetano Portugal Industrials Industrial Goods & Services
Galp SGPS Oil & Gas Oil & Gas
Compta Technology Technology
Glintt Technology Technology
Novabase SGPS Technology Technology
Reditus SGPS Technology Technology
Pharol SGPS Telecommunications Telecommunications
Sonaecom SGPS Telecommunications Telecommunications
EDP Utilities Utilities
EDP Renewables Utilities Utilities
REN SGPS Utilities Utilities
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APPENDIX IV: Financial ratios found, standardized name and category
(to be continued)
Financial ratios disclosed Standardized ratio name Category Notes
Average collection period Average collection period Activity
Average collection period average collection period Activity
Average payment period Average payment period Activity
Average payment period Average payment period Activity
Weighted average payment
period
Average payment period Activity
Adjusted solvency ratio Equity to liabilities ratio Debt Also presented as
"Adjusted equity to
liabilities"
Adjuted equity/average assets Equity to assets ratio Debt
Average book value gearing Debt/equity ratio Debt
Average market value gearing Debt/equity ratio Debt
Debt/EBTIDA Debt/EBITDA Debt
Debt/equity Debt/equity ratio Debt
Debt to equity ratio Debt/equity ratio Debt
Debt-to-equity ratio Debt/equity ratio Debt
EBITDA interest coverage
ratio
Interest coverage ratio Debt
EBITDA/Net interest Interest coverage ratio Debt
EBITDA/net interest payments Interest coverage ratio Debt
Equity ratio Equity to assets ratio Debt
Equity to assets ratio Equity to assets ratio Debt
Equity/net assets Equity to assets ratio Debt Also presented as
"Financial autonomy
ratio"
Financial autonomy Equity to assets ratio Debt
Financial autonomy ratio Equity to assets ratio Debt
Financial autonomy ratio Equity to assets ratio Debt
Gearing Net debt/capital employed
ratio
Debt
Gearing Net debt/equity ratio Debt
Gearing ratio Net debt/capital employed
ratio
Debt
Gearing ratio Net debt/equity ratio Debt
Grau de autonomia financeira Equity to assets ratio Debt
Group equity / fixed assets Equity to assets ratio Debt
Indebtedness Indebtedness Debt
Interest coverage Interest coverage ratio Debt
Interest coverage Interest coverage ratio Debt
Leverage ratio Net debt/capital employed
ratio
Debt
MLT Financial debt/total
financial debt
MLT financial debt/total
financial debt
Debt
Net debt % net capital Net debt/capital employed Debt
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Financial ratios disclosed Standardized ratio name Category Notes
employed ratio
Net debt over EBITDA Net debt/EBITDA Debt
Net debt to EBITDA RCA Net debt/EBITDA Debt
Net debt to recurring EBITDA
ratio
Net debt/EBITDA Debt
Net debt/average adjusted
equity
Net debt/equity ratio Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/EBITDA Net debt/EBITDA Debt
Net debt/invested capital Net debt/invested capital Debt
Net financial debt/EBITDA Net debt/EBITDA Debt
Net financial gearing Net debt/capital employed
ratio
Debt
Net remunerated
debt/EBITDA
Net debt/EBITDA Debt
Rácio de alavancagem
financeira
Net debt/capital employed
ratio
Debt
Rácio de alavancagem
financeira
Net debt/capital employed
ratio
Debt
Retail net debt to EBITDA Retail Net debt/EBITDA Debt
Solvency ratio Equity to liabilities ratio Debt Also presented as "Equity
to liabilities"
Current liquidity ratio Current ratio Liquidity Also presented as
"Current ratio"
Average capacity utilization
index (excluding discontinued
production lines)
Average capacity
utilization index
Other
Capex (9M period) as % fixed
assets
CAPEX/fixed assets Other
Capex/sales CAPEX/sales Other
Cash costs/gross margins Cash costs/gross margin Other
Cash flow bruto/vendas Cash flow/sales Other
Cash flow per share Cash flow per share Other
FSEs/vendas Services and
supplies/sales
Other
Gastos com o pessoal/vendas Staff costs/sales Other
Holding loan to value ratio Holding loan to value
ratio
Other
Net debt/gross operating profit Net debt/gross operating
profit
Other
Operating CAPEX as % of
Turnover
Operating CAPEX/sales Other
OPEX/Gross profit Operating expense ratio Other
APPENDIX IV (cont.): Financial ratios found, standardized name and category
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Financial ratios disclosed Standardized ratio name Category Notes
Recurrent fixed costs (without
the contribution of the
operations considered as
discontinued and restructuring
costs) as % of consolidated
turnover
Recurrent fixed
costs/sales
Other
Resultados financeiros/vendas Financial income/sales Other
Staff costs/sales Staff costs/sales Other
Tangible fixed asset coverage Tangible fixed asset
coverage ratio
Other
Comprehensive income per
share
Comprehensive income
per share
Profitability
EBIT % of turnover EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin EBIT margin Profitability
EBIT margin (%sales) EBIT margin Profitability
EBITDA EBITDA margin Profitability
EBITDA % of turnover EBITDA margin Profitability
EBITDA (%) EBITDA margin Profitability
EBITDA / turnover magin EBITDA margin Profitability
EBITDA as % of turnover EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin EBITDA margin Profitability
EBITDA margin (% sales) EBITDA margin Profitability
APPENDIX IV (cont.): Financial ratios found, standardized name and category
x
Financial ratios disclosed Standardized ratio name Category Notes
EBITDA margin as % of
revenues
EBITDA margin Profitability
EBITDA margin not including
Guaranteed Income Provisions
EBITDA margin Profitability
EBITDA per share EBITDA per share Profitability
EBITDA/sales EBITDA margin Profitability
EBITDA/sales EBITDA margin Profitability
EBITDA/vendas EBITDA margin Profitability
EBT % of turnover EBT margin Profitability
EBTIDA/net revenues EBITDA margin Profitability Also presented as
"EBITDA margin"
Effective margin % of
turnover
Effective margin Profitability
Gross margin Gross margin Profitability
Gross margin Gross margin Profitability
Gross margin % of turnover Gross margin Profitability
Gross margin percentage Gross margin Profitability
Lucro bruto/vendas Gross margin Profitability
Margem bruta Gross margin Profitability
Margem de EBIT EBIT margin Profitability
Margem de EBITDA EBITDA margin Profitability
Margem EBITDA EBITDA margin Profitability
Margem operacional Gross margin Profitability
Net margin Net profit margin Profitability
Net profit % of turnover Net profit margin Profitability
Net profit /average assets ROAA Profitability
Net profit/average adjusted
equity
ROE Profitability
Operating profit as % of total
assets
Operating ROA Profitability
Operating profit as % of
turnover
EBIT margin Profitability
Pre-tax ROIC ROIC Profitability
Recurrent EBITDA % EBITDA margin Profitability
Recurrent EBITDA margin /
% turnover (continued
operations)
EBITDA margin Profitability
Recurring EBIT margin EBIT margin Profitability
Recurring EBITDA margin EBITDA margin Profitability
Re-EBITDA margin EBITDA margin Profitability
Resultado corrente (%) Current margin Profitability
Resultado líquido
consolidado/vendas
Net profit margin Profitability
Resultado operacional/vendas EBIT margin Profitability
Return on assets ROA Profitability
APPENDIX IV (cont.): Financial ratios found, standardized name and category
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Financial ratios disclosed Standardized ratio name Category Notes
Return on average capital
employed RCA
ROCE Profitability
Return on capital employed
(ROCE)
ROCE Profitability
Return on equity ROE Profitability
Return on equity ROE Profitability
Return on equity (ROE) ROE Profitability
Return on invested capital
(ROIC)
ROIC Profitability
ROCE ROCE Profitability
ROCE ROCE Profitability
ROE ROE Profitability
ROS ROS Profitability
Underlying EBITDA margin Underlying EBITDA
margin
Profitability
Underlying EBITDA margin Underlying EBITDA
margin
Profitability
Margem EBITDA EBITDA margin Profitability
Margem EBIT EBIT margin Profitability
Book value per share Book value per share Valuation
Dividend payment on
consolidated net result
Dividend payout ratio Valuation
Dividend payment on
consolidated net result
Dividend payout ratio Valuation
Dividend payout on
consolidated net income
Dividend payout ratio Valuation
Dividend payout ratio Dividend payout ratio Valuation
Dividend yield Dividend yield Valuation
Dividend yield Dividend yield Valuation
Dividend yield Dividend yield Valuation
Dividend yield (on individual
result)
Dividend yield Valuation
Dividend/net profit Dividend payout ratio Valuation
Dividend/operating free cash
flow
Dividend payout ratio Valuation
Payout ratio Dividend payout ratio Valuation
Total shareholder return Total shareholder return Valuation
Total shareholder return Total shareholder return Valuation
Total shareholder return Total shareholder return Valuation
Total shareholder return Total shareholder return Valuation
APPENDIX IV (cont.): Financial ratios found, standardized name and category
xii
APPENDIX V: Pearson’s correlation matrix for company characteristics, p-values and R2
Ln_Size SuperSector Profitability Leverage SGPS Corp_Gov Big4 Top_shareh N_pages
Ln_Size 1
p-value
R2 1
SuperSector 0.026816 1
p-value 0.864467
R2 0.000719 1
Profitability 0.479321 0.189321 1
p-value 0.001146 0.224018
R2 0.229748 0.035842 1
Leverage -0.06161 0.216433 -0.03015 1
p-value 0.694707 0.163314 0.847782
R2 0.003796 0.046843 0.000909 1
SGPS 0.169458 -0.0965 -0.21971 -0.22048 1
p-value 0.277325 0.538166 0.156887 0.155396
R2 0.028716 0.009312 0.048271 0.048611 1
Corp_Gov 0.230234 0.097204 -0.11309 -0.15914 0.184961 1
p-value 0.137465 0.535193 0.470271 0.308061 0.235066
R2 0.053008 0.009449 0.012789 0.025325 0.034211 1
Big4 0.302714 -0.14904 0.185398 0.049237 0.181848 0.030749 1
p-value 0.048484 0.340139 0.233942 0.753866 0.243177 0.844814
R2 0.091636 0.022214 0.034372 0.002424 0.033069 0.000945 1
Top_shareh -0.06295 -0.08148 -0.16228 0.07854 -0.10758 -0.03848 0.263412 1
p-value 0.688394 0.603453 0.298495 0.616639 0.492313 0.806471 0.087879
R2 0.003963 0.00664 0.026333 0.006169 0.011573 0.001481 0.069386 1
N_pages 0.643023 0.178088 0.488654 -0.01477 0.013294 0.354259 0.203522 -0.162180919 1
p-value 3.32E-06 0.253224 0.000885 0.925127 0.932574 0.019767 0.190532 0.298780491
R2 0.413478 0.031715 0.238783 0.000218 0.000177 0.1255 0.041421 0.026302651 1
xiii
Appendix VI: Average number of ratios according to SuperSector
SuperSector Average number of ratios
Basic Resources 5.75
Construction & Materials 2.17
Financial Services 6.00
Food & Beverage 7.00
Health care 4.00
Industrial Goods & Services 6.17
Media 2.75
Oil & Gas 4.00
Personal & Household Goods 2.00
Retail 9.00
Technology 2.00
Telecommunications 1.00
Travel & Leisure 1.20
Utilities 3.67
Appendix VII: Descriptive statistics for Size and Ln_Size
Size
Mean 2,871,473.77
Standard Error 1,066,900.54
Median 617,446.00
Standard Deviation 6,996,134.72
Sample Variance 48,945,901,008,918.30
Kurtosis 26.47
Skewness 4.83
Range 42,849,559.24
Minimum 23,457.76
Maximum 42,873,017.00
Appendix VIII: Descriptive statistics for EFRD
Mean 0.244
Standard Error 0.036
Median 0.188
Mode 0.125
Standard Deviation 0.237
Sample Variance 0.056
Kurtosis 2.441
Skewness 1.580
Range 1.000
Minimum 0.000
Maximum 1.000
Ln_Size
Mean 13.48
Standard Error 0.25
Median 13.33
Standard Deviation 1.66
Sample Variance 2.76
Kurtosis -0.04
Skewness 0.27
Range 7.51
Minimum 10.06
Maximum 17.57