【文章內(nèi)容簡介】 stinguishes leverage in operations from leverage in ?nancing also distinguishes differences in contemporaneous and future pro?tability among ?rms. Leverage from operating liabilities typically levers pro?tability more than ?nancing leverage and has a higher frequency of favorable , for a given total leverage from both sources, ?rms with higher leverage from operations have higher pricetobook ratios, on average. Additionally, distinction between contractual and estimated operating liabilities explains further differences in ?rms’ pro?tability and their pricetobook ratios.Our results are of consequence to an analyst who wishes to forecast earnings and book rates of return to value ?rms. Those forecasts—and valuations derived from them—depend, we show, on the position of liabilities. The ?nancial statement analysis of the paper, supported by the empirical results, shows how to exploit information in the balance sheet for forecasting and valuation.The paper proceeds as follows. Section 1 outlines the ?nancial statements analysis that identi?es the two types of leverage and lays out expressions that tie leverage measures to pro?tability. Section 2 links leverage to equity value and pricetobook ratios. The empirical analysis is in Section 3, with conclusions summarized in Section 4.1 Financial Statement Analysis of LeverageThe following ?nancial statement analysis separates the effects of ?nancing liabilities and operating liabilities on the pro?tability of shareholders’ equity. The analysis yields explicit leveraging equations from which the speci?cations for the empirical analysis are developed. Shareholder pro?tability, return on mon equity, is measured asReturn on mon equity (ROCE) = prehensive net ine 247。mon equity (1)Leverage affects both the numerator and denominator of this pro?tability measure. Appropriate ?nancial statement analysis disentangles the effects of leverage. The analysis below, which elaborates on parts of Nissim and Penman (2001), begins by identifying ponents of the balance sheet and ine statement that involve operating and ?nancing activities. The pro?tability due to each activity is then calculated and two types of leverage are introduced to explain both operating and ?nancing pro?tability and overall shareholder pro?tability. Distinguishing the Protability of Operations from the Protability of Financing ActivitiesWith a focus on mon equity (so that preferred equity is viewed as a ?nancial liability), the balance sheet equation can be restated as follows:Common equity =operating assets＋financial assets－operating liabilities－Financial liabilities (2) The distinction here between operating assets (like trade receivables, inventory and property, plant and equipment) and ?nancial assets (the deposits and marketable securities that absorb excess cash) is made in other contexts. However, on the liability side, ?nancing liabilities are also distinguished here from operating liabilities. Rather than treating all liabilities as ?nancing debt, only liabilities that raise cash for operations—like bank loans, shortterm mercial paper and bonds—are classi?ed as such. Other liabilities—such as accounts payable, accrued expenses, deferred revenue, restructuring liabilities and pension liabilities—arise from operations. The distinction is not as simple as current versus longterm liabilities。 pension liabilities, for example, are usually longterm, and shortterm borrowing is a current liability.Rearranging terms in equation (2),Common equity = (operating assets－operating liabilities)－(financial liabilities－financial assets)Or,Common equity = net operating assets－net financing debt (3)This equation regroups assets and liabilities into operating and ?nancing activities. Net operating assets are operating assets less operating liabilities. So a ?rm might invest in inventories, but to the extent to which the suppliers of those inventories grant credit, the net investment in inventories is reduced. Firms pay wages, but to the extent to which the payment of wages is deferred in pension liabilities, the net investment required to run the business is reduced. Net ?nancing debt is ?nancing debt (including preferred stock) minus ?nancial assets. So, a ?rm may issue bonds to raise cash for operations but may also buy bonds with excess cash from operations. Its net indebtedness is its net position in bonds. Indeed a ?rm may be a net creditor (with more ?nancial assets than ?nancial liabilities) rather than a net debtor.The ine statement can be reformulated to distinguish ine that es from operating and ?nancing activities:Comprehensive net ine = operating ine－ net financing expense (4)Operating ine is produced in operations and net ?nancial expense is incurred in the ?nancing of operations. Interest ine on ?nancial assets is netted against interest expense on ?nancial liabilities (including preferred dividends) in net ?nancial expense. If interest ine is greater than interest expense, ?nancing activities produce net ?nancial ine rather than net ?nancial expense. Both operating ine and net ?nancial expense (or ine) are after Equations (3) and (4) produce clean measures of aftertax operating pro?tability and the borrowing rate:Return on net operating assets (RNOA) = operating ine 247。net operating assets (5)andNet borrowing rate (NBR) = net financing expense 247。net financing debt (6)RNOA recognizes that pro?tability must be based on the net assets invested in operations. So ?rms can increase their operating pro?tability by convincing suppliers, in the course of business, to grant or extend credit terms。 credit reduces the investment that shareholders would otherwise have to put in the business. Correspondingly, the net borrowing rate, by excluding