Chap+2b

Chap+2b - Chapter 2(contd Financial Statement Analysis...

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Financial Statement Analysis Chapter 2 (cont’d)
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Bloomberg News Wynn’s Fourth-Quarter Profit Beats Analysts’ Estimates By Beth Jinks - Feb 10, 2011 Wynn Resorts Ltd ., owner of the Wynn and Encore casinos, reported fourth-quarter profit that beat analysts’ estimates after opening a second resort in Macau . Net income of $114.2 million, or 91 cents a share , compared with a loss of $5.22 million, or 4 cents, a year earlier, Las Vegas-based Wynn said today in a statement. Profit exceeded the 70-cent average of 21 analysts’ estimates compiled by Bloomberg. 1 Spring 2011
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Bloomberg News Macau is booming as Wynn’s Las Vegas home market recovers from its steepest gambling and convention decline. The company opened Encore Macau in April, doubling its presence in the world’s biggest casino market, where overall gambling revenue surged 58 percent last year. Fourth-quarter cash flow, measured as adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 86 percent to $365.2 million , beating the $289.2 million analysts estimated . Macau Ebitda more than doubled to $296.8 million and Las Vegas gained 25 percent to $68.3 million. 2 Spring 2011
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3 Spring 2011 Focusing Question Wynn reported both Net Income and EBITDA . Which data is more important to value the company, and why?
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4 Spring 2011 Example: Income Statement Operating Expenses
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5 Spring 2011 Profit vs. Cash Flow “You Can’t Deposit Net Income, Only Cash” A firm may be profitable as measured by net income but is short of cash.
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6 Spring 2011 Profits vs. Cash Flow EBITDA Earnings before interest, taxes, depreciation and amortization Reflects the cash a firm has earned from its operation net of leverage effect How much cash is generated from utilizing the assets NI ≠ cash earned EBITDA of Nokia in 2007 = 8,029 + 1,206 = 9,235 mil
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7 Spring 2011 Outline Financial Statements Balance Sheet Income Statement Profits vs. Cash Flow Statement of Stockholders’ Equity Income Statement Analysis Balance Sheet Analysis Statement of Cash Flows
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8 Spring 2011 Learning Objectives 1. Compute various financial ratios from Income Statement of a firm in order to analyze its financial status. 2.
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Chap+2b - Chapter 2(contd Financial Statement Analysis...

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