분야
pptxⅡ. Performance & Liquidity
Ⅲ. Cash Flow
Ⅳ. Main Accounting Policy
Ⅴ. PER & Valuation by Investors
Now we will check the DSME’s cash flows statement.
We realized that cash flow statement provides us the reason why the firm’s cash position has changed between successive balance sheet dates in three activities.
At first, we can see how DSME’s cash flows have changed by operating activities. In 2004, 2005 and 2006 the amount of cash has increased a lot, but in 2008 we can see that operating activities have decreased by KRW312 billion. It is impossible to know why it happened just by observing the balance sheet and the income statement, but with the cash flows statement, we can explain it precisely.
First, DSME could acquire proper profit and net income throughout five years, and the amount increased continuously. But changes in assets and liabilities from operating activities were significantly large enough to decrease cash in 2008 even though the net income increased.
Secondly, in 2008, we can find that the cash has increased by investing activities unlike 2006 or 2007. And in 2005 we can also find that cash has increased unlike 2004.
And last, we can recognize that the outflows from financing activities has increased through the 2004, 2005. But from 2006 outflows has dramatically decreaased
Main Accounting Policy
Focused on Depreciation method
DSME is using the Double-Balance Method.
Higher depreciation charge in the first year of an assets’ life.
Gradually decreasing charges in subsequent years.
- It is also called ‘accelerated depreciation method’.
More realistic reflection of condition of assets.
This approach coincides ‘Matching Principle’ well.
F.PER & PBR of DSME
Valuation based on price-earnings multiple
Valuation based on the ratio of
market price to book value of Equity
As you see the table, we can suggest to buy the DSME’s stock because the table shows us this stock is undervalued. But we, the investors have to recognize the limitations of multiple-valuations. If the benchmarks are changed, we can decide in another way from sensitivity analysis.
