Beruflich Dokumente
Kultur Dokumente
FINANCIAL PERFORMANCE
BY
PHILOSOPHY.
1988
DEDICATION
I
ACKNOWLEDGMENT
II
ABSTRACT
prepare reliable plans for the future based on the past data
III
and weaknesses and to anticipate and guide companies future
IV
Page No.
DEDICATION
ACKNOWLEDGMENT
ABSTRACT
TABLE OF CONTENTS V
LIST OF FIGURES X
CHAPTER 1: INTRODUCTION
ACCOUNTING 6
1.8 CONCLUSION 11
2.10 CONCLUSION 50
V
CHAPTER 3: BASIC TOOLS OF PERFORMANCE MEASUREMENT
3.3 PROFITABILITY 56
3.16 CONCLUSION 94
VI
CHAPTER 5: DEVELOPING A FINANCIAL MODEL OF COMPANIES'
PERFORMANCE
PERFORMANCE 244
APPENDICES
VII
LIST OF TABLES
Page No.
CHAPTER 2
Imaginary Companies 19
Productivity 22
CHAPTER 3
CHAPTER 4
Coefficient 110
VIII
4.7.2 Ratios with the Highest Varimax Rotated
CHAPTER 5
CHAPTER 6
Companies 215
CHAPTER 7
IX
▪
LIST OF FIGURES
CHAPTER 3 Page No.
of Cash 86
CHAPTER 5
n
5.3.2 n " Coalite Group 152
n
5.3.3 " n " Allied Textile Co Plc 153
5.3.4 " ▪ " British Home Store Plc 154
5.3.5 " " Bell(Arthur) & Sons Plc 155
5.3.6 " " Wellcome Fundation 156
5.3.8 11
" Beecham Group Plc 158
5.3.21 tt ft "
Ault & Wiborg Group Plc 171
X
5.3.22 " " " • Albright & Wilson Ltd 172
• • 173
5.3.23 ' " Barrow Hepburn Group Plc
• A • Pleasurama Plc 174
5.3.24 "
5.3.48 • le U
• Airfix Industries 198
XI
•
5.3.51 It
" Richards & Wallington Ind. 201
II
5.3.52 " Norvic Securities 202
ft
5.3.53 " " Austin (F.)(Leyton) 203
CHAPTER 6
CHAPTER 7
7.3.4 ft ft "
British Home Stores 250
7.3.5 n
" n " Bell(Arthur) & Sons Plc 251
7.3.6 n
n " Wellcome Fundation 252
7.3.7 " ft
h " Benford Concrete Machinery Plc 253
7.3.9 " ft
" Marks & Spencer 255
7.3.11 ft
" Racal Electronics 257
7.3.12 " ff
• " BPB Industries plc 258
7.3.15 ft
• " Boots Co Plc (THE) 261
XII
7.3.21 " " Ault & Wiborg Group Plc 267
7.3.23 II II
n Barrow Hepburn Group Plc 269
n n
7.3.27 " Baker Perkins Holdings Plc 273
if N
7.3.33 " " Barno Industries Plc 279
u n
7.3.35 " " Batleys of Yorkshite Plc 281
a n
7.3.38 " Brocks Group of Co Ltd 284
'I
7.3.42 " Blackman & Conrad 288
7.3.43 " N II
" Amalgamated Industrials 289
n
7.3.44 " of
" Blackwood, Morton & Sons 290
7.3.48 . N
" Oxley Printing Group 294
XIII
7.3.50 " “ “ " Richards & Wallington Ind 296
n “ " Norvic Securities 297
7.3.51 "
XIV
CHAPTER 1
INTRODUCTION
CHAPTER 1: INTRODUCTION
profit centres.
Profit planning for the longer term must include action for
The drive for high profits has forced many companies to the
1
Today industrial competitiveness is improved by modifying
(Anthony, 1960).
information.
2
5) Consider action in any area not separately, but
interpretation.
been reported.
3
1.2 DEFINITION OF RATIOS
absolute, and these data have no value unless they are related
primary data and do not have economic meaning unless they are
4
1.3 THE MANAGEMENT'S TOOLS
interelationships' analysed.
year. Thus, he will need more and better data with which to
areas fruitfully.
5
other ratios and other performance aspects of the company.
their effects.
obtained from the balance sheet, where the assets are compared
accounting.
6
on our conclusions with good judgement and a fair amount of
imagination.
averages.
caution.
a trend, and some people believe that for that reason a trend
7
projection is credible. But while a definite trend shown in
business activities.
8
registered companies in Britain disappear each year.
3) Preferential creditors
government.
weaknesses.
9
2.2) To anticipate and guide companies' future
performance.
weaknesses.
10
1.8 CONCLUSION
performances.
11
CHAPTER 2
HISTORICAL BACKGROUND OF
FINANCIAL ANALYSIS
12
CHAPTER 2: HISTORICAL BACKGROUND OF FINANCIAL ANALYSIS
13
reason to question whether a corporation with a high level of
failure.
companies acts like the corporate income tax law and the
14
rate of return that the corporation is expected to earn, from
for instance, How might one obtain the maximum return from the
right.
15
statistics is needed. In short, the field of financial
(1928), Tamari (1966) and Shashua (1974) showed that the use
models are being built, tested, and amended in the search for
developments.
16
added value ratios are important for both employees and
capital
2) For communication
a) Marketing strategy
c) Business ratios
17
performance measurement which he claims is more stable and
misleading.
companies.
18
TABLE 2.3.1: An Example of Comparisons of Return on Capital
COMPANY ( 000s) Al D
SALES I 1000 I
1000 I
1000 I 1000
PURCHASES I 400 I 400 I 400 I 400
DEPRECIATION 100 75 75 75
INTEREST ON LOANS 25 25
PROFIT 50 75 50 75
CAPITAL 500 525 325 325
19
loans. This is because the capital employed is equal to total
governments.
20
total output to all the factors of production. The
input.
+ CAPITAL)
manpower and capital. Various ideas have been put forward for
and, at the same time, the added value per unit of capital is
both must suffer. One index rising and the other static is a
21
rising, static or falling productivity of manpower and capital
(Table 2.3.2).
EMPLOYEE) RISING I
STATIC 1 FALLING 1
the company.
payroll analysis (Table 2.3.3). The data they used come from
22
Table 2.3.3: Primary Production Data from Payroll
1 code 1 code 1
direct labour:
on standard: earned 3 26
on standard: clock 27
Indirect labour:
Equipment trouble 10 34
Material trouble 11 35
Setup 13 37
Service 16 40
Supervision 17 41
Factory engineering 18 42
Factory clerical 19 43
23
Direct labour subsidy (lost) 21
24
Table 2.3.4: Elementary Production Ratios
II consistency
I 11 I subsidy 45/27 D
I I index
Icost
25
21 service cost 11/5
26
So by evaluating all or a part of the above ratios
the goals of the company and ensure its health and growth.
profile of firms.
analysis for the first time in 1934 by Graham & Dood and then
27
demanded by shareholders and creditors. The key ratios in
follows:
1- profitability ratios
2- growth ratios
3- stability ratios
4- payout ratios
5- credit ratios
6- price ratios
PROFITABILITY RATIOS
capital funds
on capital)
28
Ratio 3- sales per pound of capital funds (sales
ratio)
margin)
GROWTH RATIOS
business cycles.
cycle(BC)/sales of 1st BC
for 1st BC
1st BC
STABILITY RATIOS
capital
29
The latter ratio may be supplemented by measuring the
the net income over a period of three years was among the
PAYOUT RATIO
category.
CREDIT RATIOS
listed as follow:
current assets
total capital
30
Ratio 13- coverage of senior charges = senior
dividend)
PRICE RATIOS
company performance.
31
Weston and Brigham(1975) classified the useful ratios into
LIQUIDITY RATIOS
obligations.
liabilities
liabilities.
debt.
charges + lease
ACTIVITY RATIOS
day
PROFITABILITY RATIOS
33
2.6 INDUSTRIAL AVERAGE ANALYSIS
(1972) carried out some studies with the aim of finding pairs
industrial sector, have the same size and come from the same
34
ratio of current assets to current debt of manufacturers of
series, with the largest ratio at the top and the smallest at
between the top and the bottom. To simplify the D & B tables,
we can consider:
Reporting
CA = Current Assets
CD - Current Debt
NP - Net Profits
NS - Net Sales
CP = Collection Period
In - Inventory
FD = Funded Debts
FA = Fixed Assets
TD - Total Debt
D - Days
LR - Largest Ratio
MR - Median Ratio
SR = Smallest Ratio
35
Table 2.6.1: Ranges of selected ratios and measures by
LB CA NP NP NP NS NS 1
--- 1 CP 1
36
LB NS FA CD TD In CD 1 FD 1
--- --- 1 --- 1
NR In TNW TNW TNW NWC In 1 NWC I
1 1
Airplane parts LR 8.6 .279 .432 1 .580 1 .738 I .879 1 .141 1
& Accessories MR I 5.9 I .484 .615 11.03511.034 I 1.00 1 .475 1
1 1
(59) SR 3.9 .755 1.125 11.791 1.547 1.419 .558
1
Automobile
.473 LR 8.0 .257 .235 .605 .585 1 .146 1
Parts & (84) MR 5.3 .396 .380 .778 .862 .797 1 .416 1
1 1 1
Breweries 1LR I 21.6 I .537 I .131 1 .204 1 .333 11.082 1 .096 1
1MR 16.4 .594 I .213 I .386 1 .465 11.378 11.186 1
37
(27) 1
1SR 11.4 1 .819 1 .341 1 .975 1 .877 11.949 1 762 1
II I I I I I
+ +
Chemicals, LR 10.4 .295 .336 .584 .621 .895 1 .241 1
Agricultural MR 6.6 .536 .731 1.11 1.066 1.229 1 .479 1
(33) SR 5.0 .712 1.23 1.659 1.605 2.373 1 .752 1
38
further individuals whose data has been used in constructing
nonfailed firms.
discriminant analysis.
problem.
(1982), and Betts & Belhoul (1982) in the UK. Belhoul (1983)
39
studies related to comparison of performance have been carried
THE VARIABLES
40
assets flow model of the firm of Beaver and Blum (1974)
41
being potentially industry dependent, particularly many of the
LIABILITIES-CASH)
LIABILITIES)
7. EBIT/TOTAL ASSETS
8. EBIT/NET WORTH(EQUITY)
9. EBIT/TOTAL LIABILITIES
+ DEPRECIATION)/TOTAL ASSETS
42
23. CURRENT LIABILITIES/TOTAL ASSETS
26. DEBT/EQUITY
LOANS - CASH)
LIABILITIES
43
49. log [(ACCOUNTS RECEIVABLE+INVENTORY)/ACCOUNTS
PAYABLE]
ensure that the chosen set covers all the aspects of the
PROFITABILITY RATIOS
44
gross profit to total assets
MANAGERIAL PERFORMANCE
(a) Inventory
sales to inventory
45
sales to accounts receivable
(c) Administration
SOLVENCY
46
(a) Short Term Liquidity
no credit interval
cash to sales
cash interval
EBIT to interest
47
cash flow to total debt
characteristics.
48
2- Similar differences can be encountered in the treatment
ratios.
outs.
ways.
deferral of payments.
measure exactly.
uncertain.
49
Ratios, then are extremely useful tools. But as with other
2.10 CONCLUSION
used ratio was the current ratio which was used to determine
company.
50
analysis and factor analysis have been gaining in popularity.
analysis.
51
CHAPTER 3
BASIC TOOLS OF
PERFORMANCE MEASUREMENT
52
CHAPTER 3: BASIC TOOLS OF PERFORMANCE MEASUREMENT
types:
obligations to creditors.
creditors.
proceeding.
53
3.1 CAUSES OF FAILURE
follows:
capital
4) over expansion
5) cutthroat competition
on.
54
9) disasters, such as, earthquakes, fires, floods.
compared with the same ratios which have been prepared from
1) profitability deficiency
2) management deficiency
3) solvency deficiency
55
2) Is the management any good? (managerial
performance)
(solvency)
financial health.
3.3 PROFITABILITY
56
due Pont system in Table 3.3.1 in which certain ratios are
measurement of profitability.
57
Table 3.3.1 The factors combined to yield Return on
Investment (ROI)
WORKINGI FIXED
I FIXED I I I 'LABOR' 'MATERIALS' 'VARIABLE
CAPITAL' 'INVESTMENT' 'CHARGE RATEI I I I
(OVERHEAD I
I PLUS I I
TIMES I I PLUS I PLUS I
I FIXED I (VARIABLE I
I COSTS I I COSTS I
PLUS
I
I I I I I
IPRETAX I I INCOME
'PROFIT I I TAXES
MINUS
I NET I
(PROFIT '
DIVIDED INTO
I CAPITAL I 'PROFIT I
TIMES
I RETURN ON I
IINVESTMENT I
58
Submodels provide another means of analysis. A
following Table(3.3.2).
4)DEPRECIATION
59
5) PROFIT — NET OPERATING INCOME (NOI)
resources.
as follow
r (profits/sales)(sales/assets)
termed the profit margin and the second item the turnover
60
output, whereas the turnover figure is designed to measure the
P (1-T)(rA-iL)
where
P Profits
A - level of assets
P (1-T)[rL+rE-iL]
or P = (1-T)[r+(r-i)L/E]E
or P I E = (1-T)[r+(r-i)L/E]
d(P/E)/d(L/E) = (1-T)(r-i) = 0
Therefore (r-i) = 0
and r = i
61
This is that the corporation should expand its ratio of
"rule" for determining the cut-off point for the use of debt.
rate of interest, i.
conclusion
to zero.
capital structure.
62
P/E = (1-T)[r+(r-i)L/E]
r r
0
by substituting
r 2dL/E = 2i
0
L/E r /2d
0
63
First the complex interdependence of the relevant
variables.
exogenous variable= r= r
0
64
unexplained influences on the behaviour of corporate profits.
relationship. Thus
i= dL/E
is rewritten as i= dL/E + u
profitability.
65
Profitability can be evaluated only after time has elapsed
(1970) and Wagner & Lau (1971) studies, there are several ways
66
The calculation of desired profitability or ROI of a
1) pure interest
67
Table 3.7.1 Typical profitability objectives for companies
Allowance for
Total Typical 1
Risk level Interest !Management Risk return return 1
3.7.2.
68
Table 3.7.2 Influence of profitability and risk on the
and so on
time, more debt means more risk. The financial manager seeks
evaluation of profitability.
69
volume and sales price being the most critical factors. The
since the former are repetitive and the latter is made only
once.
replacement.
antipollution requirements.
70
to profitability and the possible mathematical pitfalls
ratios.
are as follows:
basis.
R NPAT/SALES
1
R NPAT/TOTAL ASSETS
2
R NPAT/NET WORTH(SHAREHOLDERS' FUND)
3
R NPAT/WORKING CAPITAL
4
71
R = NPAT/TOTAL DEBT(TA-SF)
5
R = NPAT/CURRENT ASSETS
6
R = NPAT/FIXED ASSETS
7
R = NPAT/(PREF.DIVIDENDS+COMMON DIVIDENDS)
8
R = NPAT/(TOTAL ASSETS - CURRENT LIABILITIES)
9
R = (NPAT-PREF. DIVIDENDS)/COMMON STOCK
10
R = EARNING BEFORE INTEREST AND TAX(EBIT)/TOTAL ASSETS
11
R = EBIT/SALES
12
R = EBIT/NET WORTH(SF)
13
R = EBIT/(TOTAL LIABILITIES - CURRENT LIABILITIES)
14
R = (EBIT + DEPRECIATION)/NET WORTH(SF)
15
R = (EBIT + DEPRE.)/(TOTAL LIABILITIES - CURRENT LIABILITIES)
16
R = NET PROFIT FOR COMMON/COMMON STOCK AT MARKET VALUE
17
R = EARNING PER SHARE(EPS)/PRICE PER SHARE
18
R = EPS
19
R = SALES/(LONG TERM DEBTS+PREF. STK+COMMON STK)
20
R = SALES/TOTAL ASSETS
21
R = SALES/NET WORTH
22
R = SALES/WORKING CAPITAL
23
R = SALES/FIXED ASSETS
24
R = SALES/CURRENT ASSETS
25
R = SALES/TOTAL DEBT(TA-SF)
26
R = (SALES-VARIABLE COSTS)/EBIT
27
R = DIVIDENDS/NPAT
28
R = DIVIDENDS/NET CASH FLOW(NPAT+DEPRE. +EI)
29
R = DIVIDENDS PER SHARE
30
R = NET PROFIT PER SHARE OF COMMON FOR 2nd B.C/
31 NPPS OF COMMON FOR 1ST BC
72
R (DEPRECIATION+TOTAL INTEREST+TOTAL TAX)/(TOTAL CAPITAL)
33
h) Others 4 percent
management:
man business)
73
5) A company in which the chairman and chief
3) Overtrading
more severe. The stock market will already have reduced the
paid, and the accounts continue to show that things are not as
the company have almost certainly lost their money, and the
74
3.11 MANAGEMENT VS RISKINESS OF LOAN
function of both the interest rate the lender receives and the
the other hand, the higher the risk exposure, the lower the
variables:
1) competitive conditions
institutions
2) debt/equity
may safely assume that in most cases the smaller the debt-
equity ratio of any one firm, the less likely it is that the
75
the risk exposure of a loan (e) can be expressed as a function
e = f(M, LIE)
where
76
turnover of inventory, the cost efficiency of operations, and
R SALES/INVENTORY
34
R SALES/DEBTORS
35
R = SALES/ACCOUNT RECEIVABLES
36
R = SALES/COMMON STOCK AT MARKET PRICE
37
R SALES/AVERAGE ACCOUNT RECEIVABLES
38
R = SALES OF 2nd BUSINESS CYCLE/SALES OF 1st BUSINESS CYCLE
39
R (SALES + CHANG IN INVENTORY)/INVENTORY
40
R INVENTORY/TOTAL ASSETS
41
R INVENTORY/WORKING CAPITAL
42
R INVENTORY/SALES
43
R INVENTORY/CURRENT LIABILITIES
44
R INVENTORY/(TOTAL ASSETS - CURRENT LIABILITIES)
45
R INVENTORY/CURRENT ASSETS
46
R DEBT/WORKING CAPITAL
47
R - CURRENT LIABILITIES/INVENTORY
48
R = CURRENT LIABILITIES/WORKING CAPITAL
49
R - CURRENT LIABILITIES/TOTAL ASSETS
50
R - (TOTAL LIABILITIES + PREF. STOCK)/TOTAL ASSETS
51
R - COMMON DIVIDENDS/COMMON STOCK AT MARKET VALUE
52
R COMMON DIVIDENDS/NET PROFIT FOR COMMON
53
R COMMON DIVIDENDS/NPAT
54
R - COMMON STOCK (BOOK VALUE)/TOTAL CAPITAL
55
R COMMON STOCK (BOOK VALUE) /COMMON STOCK (MARKET VALUE)
56
77
R ... COMMON STOCK/NET WORTH
57
R = FIXED ASSETS/NET WORTH
58
R = FIXED ASSETS/DEBT
59
R ... FIXED ASSETS/TOTAL ASSETS
60
R - FIXED ASSETS/(TOTAL ASSETS - CURRENT LIABILITIES)
61
R =. RECEIVABLES/SALES PER DAY
62
R = RETAINED EARNINGS/TOTAL ASSETS
63
R ... RETAINED EARNINGS/NPAT
64
R ... RETAINED EARNINGS/NET WORTH
65
R = ACCOUNT PAYABLE/PURCHASE PER DAY
66
R ... OPERATING EXPENSES/GROWTH MARGIN
67
R = OPERATING EXPENSES/TOTAL ASSETS
68
R ... (OPERATING EXPENSES+COST OF SALES)/SALES
69
R = COST OF SALES/AVERAGE GOODS INVENTORY
70
R = COST OF SALES/SALES
71
R = DAYS IN PERIOD/INVENTORY TURNOVER
72
R = CASH/CURRENT ASSETS
73
R = NET WORTH/TOTAL ASSETS
74
R - TOTAL INTEREST/TOTAL ASSETS
75
R = TOTAL INTEREST/EBIT
76
R - TOTAL TAX/NPAT
77
R = (PBT+INTEREST CHARGES+LEASE CHARGES)I(INTEREST CHARGES
78 + LEASE)
78
3.13 OPTIMUM AMOUNT OF CASH
the profit level: the more the better, to put it simply. But
Let
period
KIT KD/Q
level of cash is
1/2(Q+0) = 1/2(Q)
C =kQ/2 + KD/Q
80
= \/(2KD/k)
81
If the expected demand rate is D so the expected cycle
length is
EC - Kii + kP + cP /i
1 2
where
P the expected number of unit periods of cash stock
1
P the expected number of unit periods of cash shortage
2
Figure 3.13.1
Time
P 1/2TQ + i(R-h)
D - distribution
82
Which should be minimised witb respect to R. Usually this
83
THE MILLER MODEL
no leadtime
one hour. During this time the cash balance will either
action will be taken, but when the balance reaches the upper
level.
84
Let
2
sd = variance of the daily demand for cash
Then cost per day of managing the firm's cash balance over
optimum values)
* 3,/ 2
Z = \ (3ysd t/4u)
* *
h = 3Z
form
2
M = 413\ 3ysd /4u
85
*
the safety level, sell securities of amount Z pounds.
*
h above the safety level, buy securities of amount 2Z pounds.
CRI1
•.....
a)
C.)
g
M
H _ . 1_
0 x
..0
.4
m 2z
as h
C.)
PI
-
H
• rl
0
z
1::)
Safety leve
A B (1
Time
At the time A the transaction balance reached zero, so
safety level.
Haley (1967), Calman (1968), Rao (1973), and Charnes, Cooper &
purchases.
86
purchases.
Let
TP - total profits up to the planning horizon
TP =t13 Y -ItCX
j j j=1 j j
subject to
i-1
- <B- A (i = 1,2,3,....,n)
j = 1 j j-1 j
i-1
Y -X <A (i = 1,2,3,....,n)
j=1 j 3=0 j
i-1
sales up to i ( k__ Y ) minus previous purchases ( X ).
j=1 j j=1 j
87
for example if i = 2
i-1
previous period (C: X ) minus total sales up to and including
j=1 j
i-1
the previous j = 1 period ( Y )
j=1 j
for example if i = 3
and write
i-1
CX- 7-- PY<M- M (i = 1,2,3,....,n)
j=1 j j j=1 j j 0
i-1
period (=IP Y ) minus the total value of purchases up to
j=1 j j
i-1
and including the previous period (ZC X ).
j=1 j j
88
In the above it is being assumed that collection of debts
takes one period but allowance can be made for lags in both
C X -P Y <M -M
j=1 j-g j-g j=1 j-r j-r 0
of a bond as:
4) Years to maturity
bond as an investment.
89
P = M/(1+R) + C[((l+R) -1)/R(1+R) ]
Where
P = present value
rate
16
P = 1000/(1.07) + 50[(1.07)-1]/0.07(1.07) = 339 + 472 = 811
pound, and the annual interest payments are worth 472 pound at
life.
90
Optimal financial and capital structure was studied by
I I
1
1 PERCENT OF AFTER TAX(a) I WEIGHTED
I 'TOTAL CAPITAL I COST (Z) I COST (Z)
1
+
+ +
1
TOTAL 100.0 9.50 I
+ +
are not.
debt = 6%
debt - 8%
92
R = CURRENT ASSETS/NET WORTH
83
R = (CURRENT ASSETS - INVENTORY)/TOTAL ASSETS
84
R = (CURRENT ASSETS - INVENTORY)/SALES
85
R = (CURRENT ASSETS - INVENTORY)/CURRENT LIABILITIES
86
R = CASH/(TOTAL ASSETS - CURRENT LIABILITIES)
87
R = CASH/SALES
88
R = CASH/CURRENT LIABILITIES
89
R = CASH INTERVAL
90
R - CASH FLOW/SALES
91
R = CASH FLOW/TOTAL ASSETS
92
R = CASH FLOW/NET WORTH
93
R = CASH FLOW/CURRENT MATURITIES OF LONG TERM DEBT
94
R = CASH FLOW/CURRENT LIABILITIES
95
R = CASH FLOW PER COMMON SHARE
96
R - CASH FLOW/TOTAL LIABILITIES
97
R = WORKING CAPITAL/INVENTORY
98
R = WORKING CAPITAL/FIXED ASSETS
99
R = WORKING CAPITAL/TOTAL ASSETS
100
R - WORKING CAPITAL/CASH FLOW
101
R = WORKING CAPITAL/SALES
102
R = WORKING CAPITAL/NET WORTH
103
R = CURRENT LIABILITIES/TOTAL LIABILITIES(TA-SF)
104
R = CURRENT LIABILITIES/(CURRENT ASSETS - INVENTORY)
105
R = CURRENT LIABILITIES/NET WORTH(SF)
106
R = CURRENT LIABILITIES/CURRENT ASSETS
107
R = TOTAL LIABILITIES/TOTAL ASSETS
108
R = TOTAL LIABILITIES/NET WORTH
109
93
R = TOTAL LIABILITIES/CURRENT ASSETS
110
R = NET WORTH/FIXED ASSETS
111
R = NET WORTH/TOTAL LIABILITIES
112
R = EBIT/INTEREST
113
R = EBIT/FIXED CHARGES
114
R NO CREDIT INTERVAL
115
R = ANNUAL FUNDS FLOW/CURRENT LIABILITIES
116
R = REDUCED SALES INTERVAL
117
R - REDUCED OPERATIONS INTERVAL
118
R DEBITORS/CAPITAL FUNDS
119
R = LONG TERM LIABILITIES/(STOCK+SURPLUS-INTANGIBLE ASSETS)
120
R = DEPRECIATION/TOTAL ASSETS
121
R = CREDITS/NET WORTH
122
R = BASIC DEFENSIVE INTERVAL
123
R = MARKET VALUE OF EQUITY/TOTAL LIABILITIES
124
R - MARKET VALUE OF EQUITY/LONG TERM LIABILITIES
125
R = (CASH+MARKET SECURITIES-CURRENT LIABILITIES)/PROJECTED
126 DAILY OPERATING EXPENDITURE
3.16 CONCLUSION
performance analysis.
94
literature reveals that the techniques available in the past
financial analysis.
95
CHAPTER 4
96
CHAPTER 4: METHODOLOGY OF FACTOR ANALYSIS
97
Plc- of company data in a computer readable form. It covers
accounts.
per share, net profit per share, purchase per day, cost of
R = NI/SALES
1
R = NI/TA
2
R = NI/SF
3
R = NI/(CA-CL)
4
R = NI/(TA-SF)
5
R = NI/CA
6
R = NI/FA
7
R = NI/(PD+CD)
8
R = NI/(TA-CL)
9
R = (NI-PD)/0C
10
R (PBT+TI)/TA
11
98
R = (PBT+TI)/SALES
12
R = (PBT+TI)/SF
13
R = (PBT+TI)/(TL-CL)
14
R = (PBT+TI+DEPRE)/SF
15
R = (PBT+TI+DEPRE)/(TL-CL)
16
R = SALES/(TL-CL)
20
R = SALES/TA
21
R = SALES/SF
22
R - SALES/(CA-CL)
23
R = SALES/FA
24
R = SALES/CA
25
R = SALES/(TA-SF)
26
R - (PD+CD)/NI
28
R - (PD+CD)/(NI+DEPRE+EI)
29
R - CD/SF
30
R = (DEPRE+TI+TT)/(P5+0C+DC)
33
R = SALES/INVENT
34
R = SALES/DEBTS
35
R = INVENT/TA
41
R = INVENT/(CA-CL)
42
R = INVENT/SALES
43
R = INVENT/CL
44
R = INVENT/ (TA-CL)
45
R = INVENT/CA
46
R = (TA-SF)/(CA-CL)
47
R = CL/INVENT
48
R - CL/TA
50
99
R = (TA+PS)/TA
51
R = CD/NI
54
R = OC/SF
57
R = FA/SF
58
R = FA/(TA-SF)
59
R = FA/TA
60
R = RE/TA
63
R = RE/NI
64
R = RE/SF
65
R = CASH/CA
73
R = SF/TA
74
R = TI/TA
75
R = TI/(PBT+TI)
76
R = TT/NI
77
R = CA/CL
80
R = CA/TA
81
R = CA/SALES
82
R = CA/SF
83
R = (CA-INVENT)/TA
84
R = (CA-INVENT)/SALES
85
R = (CA-INVENT)/CL
86
R = CASH/(TA-CL)
87
R = CASH/SALES
88
R = CASH/CL
89
R = (NI+DEPRE+EI)/SALES
91
R = (NI+DEPRE+EI)/TA
92
R = (NI+DEPRE+EI)/SF
93
100
R = (NI+DEPRE+EI)/(TA-SF)
94
R = (NI+DEPRE+EI)/CL
95
R = (CA-CL)/INVENT
98
R = (CA-CL)/FA
99
R = (CA-CL)/TA
100
R (CA-CL)/(NI+DEPRE+EI)
101
R = (CA-CL)/SALES
102
R = (CA-CL)/SF
103
R = CL/(TA-SF)
104
R = CL/(CA-INVENT)
105
R = CL/SF
106
R = CL/CA
107
R = (TA-SF)/TA
108
R (TA-SF)/SF
109
R = (TA-SF)/CA
110
R = SF/FA
111
R = SF/(TA-SF)
112
R = (PBT+TI)/TI
113
R DEBITS/SF
119
R = DEPRE/TA
121
R = CREDITS/SF
122
101
4.2 FACTOR ANALYSIS
1969).
(1962), Hendrickson & White (1964) and Turcker, Koopman & Linn
102
these scientists to gain a better understanding of the complex
steps as follows:
ratios.
average, tall people are heavier and short people are lighter,
103
between height and weight. Both height and weight would be
Olsson & Rosen (1966), Guertin & Bailey (1970), Lawley &
the ratios.
logically.
104
original observations of the ratios. It sets about
Z x /Sx
it it i
Where
-Tx IT
i t=1 it
2 /T 2
Sx = = \//k11(X - X ) /T = \/ x /T
t=1 it i t=1 it
_ T
Z =Z IT ===x /TSx =(Z=X -TX =(TR)/TSx -TX )/TSx =0
i t=1 it t=1 it i t=1 it i i i i
2 T 2 T 2 2 2 2
S z Z /T =Z:x /TS x = S x IS x = 1 (i=1,2,3,..,n)
i t=1 it t=1 it i
105
way and made mutually comparable. The actual normalization
observations.
T 2 T 2
Sz z = C--2
Z /T= Z:x x /TSx Sx ===x x / V/C:x x
i k t=1 it kt t=1 it kt i k t=1 it kt t=1 it t=1 kt
Sz z =r
i k ik
2 T T 2 2 2 2
S z ===Z Z /T =Z: x /TS x = S x /S x = 1 = r
i t=1 it it t=1 it i i i
get:
Z,....,Z Z=Z Z Z
11 n1 t=1 it it t=1 it nt
106
ITr , ,Tr I 1r , ,r 1
1 11 1n1 1 11 1n1
. 1
1= T 1 I= TR
1Tr „Tr 1 1r , ,r 1
I nl nnl ml nn1
R ZZ//T
2
consequence of (S z = 1 = r ) the element of the main diagonal
i ii
equal one.
(volatile).
107
TABLE 4.3.1: RATIOS WITH VOLATILE STANDARD DEVIATIONS
+
II
'RATIOS 11971
1 1 1 1 1 1 1
172 173 174 175 176 177 178 179 180 181 182 183 184 185
1 1 1 1 1
1
+ +
R4 3.7 4.3 148 9.4 2.8 53 5.8 3.1 6.3 1.9 10 2.1 5.413.81.861
R8 293 3.8 3.4 134 66 12 96 5.3 6.1 23 62 88 65 142 126 1
R10 3 2.5 2.8 3.8 3.1 6.6 4.7 5 12 283 13 22 13 115 1.581
R20 4.1 3.5 11 3.2 3 3.9 3.3 2.7 2.9 3.1 4.2 26 5.512.612.11
R22 5.3 4.7 79 4.5 4.7 5.6 5 4.1 3.9 3.9 5.1 26 5.515.712.71
R28 404 .9 .67 1.7 .45 11 .61 .29 1.3 100 3.3 2 .761.8911.51
R33 3.7 3.1 3.9 4.7 3.8 4.2 4 5.2 12 7.9 8.1 11 12 110 1.751
R54 356 .68 .66 .98 .43 10 .55 .28 1.2 100 3.2 1.9 .711.8411.21
R64 .41 .91 .7 3.6 .46 33 .83 .3 1.3 1.5 3.8 2.1 .781.8911.61
R76 .7 .58 .51 .71 .43 12 1.1 1.4 3.3 1.6 6.2 8.2 1.415.41.551
R99 1.7 1.2 2 1.2 1.9 1.8 1.5 1.7 1.6 1.8 1.8 8.3 48 158 11.31
R106 1.3 .97 22 1.9 1.4 1.9 1.5 .94 3.9 1.3 1.6 10 1.711.41.731
R109 1.6 1.3 23 2.5 1.6 2.2 1.8 1.3 10 1.6 1.9 10 1.912.11 1 1
R113 385 166 404 106 267 173 185 217 183 184 145 116 81 168 145 1
+ +
108
When all the interdependence correlation between ratios
eliminate the others from the whole battery and from the
109
TABLE 4.3.2: RATIOS WITH THE HIGHEST CORRELATION COEFFICIENT
+ +
1 1 1 1
1 RATIOS !YEAR 1N0 COI R2 R6 R11 I R12 I R91 R63 IR95I R94 1
+ +
1 1
1 R1 11971 339 .79 I .62 I .78 .98 .92 I .67 .76 I .67 1
1 R1 11972 j 607 II .71 I .14 I .26 I .94 I .33 I .54 I .47 1
1 R1 11974 I 561 I .68 .79 I .56 I .90 I .91 I .62 I .72 I .58 1
1 R1 11975 I544I .75 I .73 .65 .92 .88 J .69 .75 I .64 1
1 R1 11976 I 541 I .77 I .71 I .69 .94 I .85 I .71 I .72 I .65 1
1 R1 11977 I 574 .66 I .65 I .56 I .94 J .87 .59 I .72 I .70 1
1 R1 11978 I 548 I .67 I .66 I •57 I .91 .89 I .60 I .63 .62 1
1 R1 11979 517 I .72 I .28 I .65 I .92 I .91 I .64 I .72 I .69 1
1 R1 11982 I 496 .81 .81 I .76 I .92 .88 I .66 I .66 .64 1
1 R1 11983 I 509 I .72 .75 I .67 I .93 I .89 I .69 I .67 .65 1
1 R1 11984 I493I .77 I .80 I .70 I .91 .89 I .71 I .65 I .60 1
1 R1 11985 I 142 I .65 .93 .54 I .91 I .89 J .62 I .80 .68 1
1 1
+ +
R = NI/SALES
1
R = NI/SF
2
R = NI/(TA-SF)
5
R = NI/FA
7
R = SALES/(TA-SF)
26
110
R - (PD+CD)/(NI+DEPRE+EI)
29
R - CD/ SF
30
R - (DEPRE+TI+TT)/(PS+0C+DC)
33
R = INVENT/CA
46
R - CL/TA
50
R = (TL+PS)/TA
51
R - OC/SF
57
R - FA/SF
58
R = FA/(TA-SF)
59
R -. CASH/CA
73
R = TI/TA
75
R = TT/NI
77
R = CA/CL
80
R - CA/SALES
82
R - CA/SF
83
R - (CA-INVENT)/TA
84
R - CASH! (TA-CL)
87
R = (CA-CL)/INVENT
98
R = (CA-CL)/(NI+DEPRE+EI)
101
R - (CA-CL)/SF
103
R - CL/(CA-INVENT)
105
R = DEPRE/TA
121
which are present in more than one ratio at the same time.
111
According to Schilderinck (1977), the factors which the
There are two differences between the common factor and the
112
(i = 1,2,3, ,n), (t = 1,2,3, ,T)
conditions:
T f /T = 0
j t=1 it
2 T 2
a s f f /T = 1
j t=1 jt
sf f = (f f )/T = 0
j j' t=1 jt j't
=s /T = 0
i t=1 it
2 T 2
b= Ss =s /T = 1
i t=1 it
Ss s = (s s )/T = 0
i t=1 it i't
E(e ) = e IT = 0
i t=1 it
T 2
Var(e ) = e IT = 1
i t=1 it
Cov(e e ) = ( e e )/T = 0
i t=1 it i't
113
Sf s = E(f s )/T = 0
j i t=1 jt it
Sf e (f e )/T = 0
i i t
=1 jt it
Ss e :•(s e )/T = 0
ii t=1 it it
2
From (SZ = 1 =r ), considering (Z =af +af+....+
i ii it lilt i2 2t
2
S Z =Z:(Z Z )/T =1/T(Z:(a f +a f +...+ a f + b s +
i t=1 it it t=1 ii it i2 2t im mt i it
2 m2 T2 2 T 2 2 T 2
C e ) ) =a (==f /T) + b ( --S /T) + c (==e /T) +
i it j=1 ij t=1 jt i t=1 it i t=1 it
m m
2Z: a a (Z:f f /T) + 2b Z:a (==f s /T)
j-1 j 1 =1 ij ij' t=1 it j't i j=1 ij t=1 jt it
m2 2 2
+b +c (i=1,2,3 ,....,n)
j=1 ij i i
so that
2 2 2 2
Sz = h +b +c
i i
where
2
a) h represents that part of the total variance which
114
associates with the variance of other ratios. This part of the
2
b) b is the part of the total variance, which shows no
2
c) c is the part of the total variance which is due to
to the factor f .
115
As mentioned previously, factor analysis aims in fact at
observation is therefore:
Z -a f +a f+ + a f (i1,2,3,. ..,n)
it il it i2 2t im mt
Z = AF
or in detail
IZ , ,Z 1 la „a (I f , ,f I
I 11
1TI 1 11 iml I 11 iTI
1 1=1 11 1
12 , , Z la
1 „a lif , If 1
Where
116
FF 1 = Z:f f l = TRf fi
t=1 jt jt
factor but they all end up with a column of numbers, one for
117
factor. These loadings represent the extent to which the
correlations between the ratios and the factor. The most well
R. For example
possible.
118
The total variance extracted in a factor analysis is
m2
where m is the number of common factors. All the data
il ij
n2
number of ratios. If a represent the sum of squares of
i=1 ik
119
reproduce the correlations in R, then R will have same
1
factor from the residuals left after taking out factor m-1,
120
matrices of the same number of factors, there are infinitely
a a V v
11 12 11 12
a a
'cos a sin a 1 V v
21 22 xl I= 21 22
a a 1-sin a cos a I V v
31 32 31 32
a a V v
41 42 41 42
A V
equation
(AV) 1 =V 1
- V/
VV 1 = A A Al Ai
The reason for this is that the diagonal terms of the product
121
2 2
matrix are equal to cos a+sin a, which equals 1 for all 'a' and
R = AA'
matrix, that is
AIA I = AA'
Since the value of 'a' is not specified, this means that there
'a'.
columns.
122
these conditions are not met, then AA' is not equal to the
123
on the others. Several other methods were suggested by Mulaik
2 n 2 2 2 n 2 2
Sd = 1/nZ:(a ) - 1/n (==a )
i=1 ij i=1 ij
follows:
m 2
V = Sd
j=1 j
each factor has been rotated with each of the other factors,
124
These cycles are repeated until V fails to get any larger. The
2 2
Sd +Sd for the rotated factors will be as large as possible.
i j
x y X Y
11 ii
x y 'cos a-sin al X Y
22 x I 1= 22
x y 'sin a cos al X Y
33 33
. .
x y X Y
n n n n
V1 A V2
2 2
maximise Sd + Sd, V2 is the matrix of factor loadings for which
2 2
Sd +Sd is a maximum, and A is the orthogonal transformation
ii
follows:
X = x cos a + y sin a
Y = -x sin a + y cos a
2 2 2 2
tan 4a = 2[n::(x - y )(2xy) - 7_1(x - y ) ( 2xy)]/n
2 22 2 2 22 2
6::[(x - y ) - ( 2xY) ]} - {[:— ( x - y )] [(2xY)] }
The value of 'a' must chosen such that the above equation
125
is maximised. To ensure that the value of 'a' gives a maximum
determined as follows:
-1/4(180-4a) = -(45-a)
Since the sin and cos are both negative in the third
rotation will be
1/4(180-4a) = (45-a)
If we assume that:
2 2
A - (x - y )
2 2 2
B = [(x - y )]
C = 2xy
126
2
D = (2xy)
A AC A- D 1
Tan 4a = 2[4(-.3587)-(.8267)(-.3053)]/4((-1.2033)}-
0
Where Cos 39 = .7771 and Sin 39 = .6293
The varimax rotation tends to possess invariance property.
ratio.
128
TABLE 4.7.2 RATIOS WITH THE HIGHEST VARIMAX ROTATED FACTORS
1 1 I I I I I I I 1 I
'RATIOS 11971 172 173 174 175 176 177 178 179 180 181 182 183 184 185 1
I I I I I I I I I I I
R1 I
.84 .641.481.7 1.811.751.851.741.851.911.831.781•721•921•951
R2 I
.76 .771-.91.841-.91-.61-.81-.71.991-.91-.91-.71.711.791.791
R7 .7 .431.711.431.601.601.321.291.341.351.591.3 1.791.881.651
R26 I
.76 .811.841.831.8 1.851.741.831.831.831.841.861.681.761-.71
R59 I - .8 1-.71-.81-.7I--51-.81--71--71-.61-.51-.81-.71-.51-.61-.81
129
1 R101 1 .74 1.971.471.041.941-.71.441.6 1.231.251.8 1.741.351. 1.411
If we assume that
A = 1.00 - .90
B = .90 - .80
C = .80 - .70
D - .70 - .60
E - .60 - .50
F= .50- .00
+
I 1
I 1 1 1 1 1 1 1 1 1 1 1
'RATIOS 11971 172 173 174 175 176 177 178 179 180 181 182 183 184 185
+
1 11111111 1 I 1
R1 I B ID FICIBIC BIC BIA BIC CIAIA
R2 I C IC AIBIAID BIC AIA BIC CIBB
R57 I E IFAFICIBBIDABBCEFD
R58 D DABICIBEIDBCCADBC
I BIBIBIBIBIBIAIAA
R87 I A IAI BIAIA1B
131
I R103 1 B IBIAIDICI C IBI B I A I C I B I A I C 1 1A1
I R105 1
D IEIDIDICIEIFIFIDIFIEID1F1E1E1
I
R121 1
F IFIFIFIFIFIFIFIFIFIFIFIFIEIF1
1 1 1 1 1 1 1 1 1 1 1 1 1 1
+ +
high stability.
R = NI/SALES
1
R - NI/SF
2
R = NI/(TA-SF)
5
R = SALES/(TA-SF)
26
R = INVENT/CA
46
R = CL/TA
50
R = CASH/CA
73
R = CA/CL
80
R = (CA-INVENT)/TA
84
R = CASH/(TA-CL)
87
R = (CA-CL)/SF
103
132
like" the factor, whatever it is. Those ratios that are
"like" the factor, that is, have high loadings on the factor,
are examined to find out what they have in common that could
be the basis for the factor that has emerged. High loading in
correlating with the factor less than .30 has less than 10
133
percent of its variance in common with the factor. The other
.71 50 EXCELLENT
.63 40 VERY GOOD
.55 30 GOOD
.45 20 FAIR
.32 10 POOR
4.9 CONCLUSION
134
to choose the most significant and reliable ratios among the
others.
factor analysis.
135
CHAPTER 5
o COMPADIES' waymmInn
136
CHAPTER 5: DEVELOPING FINANCIAL MODEL OF COMPANIES' PERFORMANCE
Klett (1972), Dunn & Clark (1974), Harvis (1975), Afifi & Azen
where
The standard scores on the n ratios (in our case 27) used
137
loadings above a selected cut off point. This development,
b +br +br + + b r =r
1 212 313 n ln
if
br +br +b + + b r =r
131 232 3 n 3n 3f
br +br +br+ +b =r
1 n1 2n2 3n3 n nf
Rb = rf (5.1.3)
138
between the ratios and the factors, that is, orthogonal factor
be solved as follows:
-1
b R rf (5.1.4)
by the SPSS(1975) for all the 27 ratios (n =27) for each of 530
139
TABLE 5.1.1 FACTOR SCORE COEFFICIENTS
I. -1-
I I I I I I I I I
-V
1
I I I I I I I I
1R1 .04411.12011.04851.44811-.0481.04391-.0671-.1811.09491-.0941-.0591
1R2 -.0831.08971-.3771.30961-.0211.11021-.0351.00521.03711.66511-.0131
1R5 .00551-.0651.04031.51201-.0171.08431-.0171.17361-.2461.09301-.0031
1R7 1-.0011.02751-.0011.01671.00181-.0251.00871-.0141-.1791-.0051.05801
1R261-.0431-.1011-.0241.04101.01091.11991-.0311.5110i.1561i-.061i-.024i
1R291-.0001-.0051-.0021.00841.00551.01061-.0181.00011-.0101.03251.31411
1R301.00481.00731.00121.04151-.0011.01631-.0011-.0061.01281.10111.01501
1R331.00481.00791.00561-.0001-.0041-.0071.02971-.0031-.0121.10311-.0091
1R461.06531.37691-.0131.00091-.0041.29501.38121.10721-.0721.01471.03641
1R501-.0201.45101-.0301.08791.05141.49841-.4201.03331.13821.13391-.0181
1R511-.0031-.0031.00511-.0091-.0061-.0151-.0141.04701.00641-.1241-.0431
1R571-1.121.13611-.6571.25341-.0041.11621.11031-.0891-.2261.62931-.0041
1R581-.0121-.1351.22161.00131-.0441-.0091-.0481-.0041.23661.67261.04001
1R591-.0161-.1011.01681.01751-.0001-.0391-.0751.15361.18861-.1871.02941
1R731-.0151-.0061-.0451-.0241.54021.04151.03381-.0291.02871.05961-.0211
1R751.00101.00311.00021-.0091-.0061-.0111.00581-.0111-.0071.03021-.0121
1R771-.0001.00281.00111-.0011-.0001-.0041-.0021.00501-.0061-.0141.00191
1R801.01451.01071.02361-.0511.01641.19831.54781.07131.18801.20571.07131
1R821-.0221-.0021-.0101.06591.00451.14261.01991-.3461.36611-.1481.08071
1R831-.1721.19481.56871.11181.01891.00961.20881-.0381-.3411-.2761-.0011
1R841.09531.61241.05801.08041-.1251-.8341.23351.32441.28751-.0071.04581
1R871.01421-.0161.00611-.0321.49221.14541.03451-.0241-.0791-.0331-.0081
1R981.00191-.0261-.0041.00521-.0001.05451-.0181-.0051.17811.00601-.0081
11011-.0031-.0011.00011-.0031.00501.00261-.0131.00291-.0341-.0241.36291
140
11031-.0701.09111-.1891-.0601.02131.03601.19001-.1371-.3371.1014 00311
11051-.0091.03001.00721.05541.01241.10481-.0371.06681.15801-.0131.00061
11211-.0111-.0281.00561-.0001-.0171-.0291.01531.00991.04241.22601-.0441
I I I I I I I I I I I
+ +
scores for the individual data cases are calculated from the
is:
F = (A IA) A (5.2.1)
F = S R (5.2.2)
built for each factor in the final solution. For each data
f = Fz (5.2.3)
factor analysed.
141
For example, from the factor-score coefficient matrix in
equation to:
f = - 1.11449z
1 57
f = .61235z
2 84
f = .568742
3 83
f = .44807z + .512z
4 1 5
142
f = .54025z + .49215z
5 73 87
f = .49844z
6 50
f = .51104z
8 26
f - .31409z + .30982z
11 29 101
f +f+f+f+f+f+f+f+f+f +f=
1 2 3 4 5 6 7 8 9 10 11
143
(R - .1116)1.1209 - .17859(R - .2196)/3.0873 +.51104(R -3.0922)
5 7 26
Or simply
then we have:
144
CL)/SF + 4.394CASH/(TA - CL) - 1.989
(5.2.4)
Where
NI = NET INCOME
SF = SHAREHOLDERS' FUND
TA = TOTAL ASSETS
CA =, CURRENT ASSETS
CL = CURRENT LIABILITIES
INVENT = INVENTORY
It means that all the companies with Y score above and higher
out how well the model can classify those companies whose data
were used to construct the model, then doing the same test for
145
classify them according to their Y-scores. On the other hand
1 1 FAILED
1 CLASSIFICATION 1 NO OF I I GOING 1
I 1 COMPANIES RECEIVERSHIP 1 OTHERS I 1
1 1 I I
+ +
1 1
1 FAILED I 18 13 2 31
I GOING 1 35 o 0 35 1
1 1
+ +
the above table the results are quite good and it can be said
follows:
a) profitability ratios
146
1) NI/SALES
2) NI/SF
3) NI/(TA-SF)
4) SALES/(TA-SF)
5) CA/CL
6) CL/TA
7) (CA-CL)/SF
C) LIQUIDITY RATIOS
8) CASH/CA
9) CASH/(TA-CL)
10) (CA-INVENT)/TA
ratios by their mean values then dividing the total values for
1) profitability 30%
3) liquidity 33%
Bradford and the 'Y-value' for all of them was computed for
each year (for which data was available) and plotted against
147
time. In the following pages, we have compared the 'Y-value'
from 1973 until 1984. The top right graph is a plot of the
graph shows the company's cash position and the bottom right
remains unchanged.
5.3.2 DEMONSTRATION OF THE MODEL'S EFFECTIVENESS ON FAIR PERFORMING COMPANIES
149
model. The main conclusion is that in most well performing
the performance model is going up and down but they all are
150
0.22
0.200
6.0
0.175
5.5
0.150
E4.5
4.0 0.100
/'
3.5 0.075
3.0 0.050
1974 1976' 197EI 198d 1982r 1984' 1974- 1976 1978 1980 1982 1984
YEAR YEAR
0.401
1 2.0 N.
0.35
\\ / 4 \\ (_)
1.0 _-
z:
cc •-••••
0.5
0.1
GENERAL ELECTRIC CO
Y VALUE
--NI/SFILES
-NI/SF
-NI/TA-SF
--CASH/SF
Figure 5.3.1 Testing the Effectiveness of the Model -CASH/TA-CL
CA/CL
-{i1C/SF
CL/TA
151
0.40
6-
0.35
0.30-
*L-j• 0.25
1/4
1/4 1/4
tz
ilf\f \
2 \/\
0.10
\-)
0.05-
1974 1976 1978 1980 1982: 1984' 1974' 1976 1978 1980 1982 1984
YEAR YEAR
0.2
0.20
2.0
// I
F--
E'T 1.5
'-' 1 . 0 /
0.5
0.05
1974 1.976 1.978 1980 1.982 1984
YEAR
1974 1976 1978 1380 1982 1984
YEAR
COALITE GROUP
---
Y VALUE
-NI/SF
-NI/TA-SF
CRSH/SF
Figure 5.3.2 Testing the Effectiveness of the Model CRSH/TA-CL
------CF1/CL
WC/SF
CL/TA
152
4.5
V,-
0.06
0.04
1.0 ,
1972. 1974 1976 ' 1978' 1980 1982. 1984 1972 197.4 . 1976 1978 1980 1982 1984
YEAR YEAR
0.1 3.5
0.14 3.
0.12 2.T
0.10 0.
cc
01-11
0..
-
r0.08 1.5
tr)
cc
0.06 1.0
0.04 0.5
153
7. Q
6.5 0.40
6.0 0.35"
./ •
0.30
1.0 0.25-
7-\\ ,--\
13-- 4.5 a. 0.20-
4 .0- 0.15
0. 10-
3.0
0. 05-
1974 1976' 1978 1980 1982 1984 1974' 1976 1978' 1980' 1982' 1984'
YEAR YEAR
0.5
\
\
./
2.5"
0.4- /I
E / -
I
/
/
tr10.3- ILi
1.5
0.2 I //"/ °
1.0
0.1-
I \\ Jj 0.5
11 S.
S.
1974 1976 1976' 1980. 1982 1984' 1574 1976 1978. 1980 1.982 1984
YEAR YEAR
154
0.30
fN, i, \ ,f
6
0.25
I \-/' "i , \‘‘ %
5 I I
,i)
, 0.z,, ,, , 1
,-c. , , i n\
0.15 /......_.., A ! / ----/\
o / \ \\L/ \
\ ,
0.10 . ,,,..
s„,„,‘
, , , • _. _ ,. . „. _, , ,
2
0.05 ii \
/
1972 1974 1976 197d mid 19E4 1984' 1972: 1974' 1976 1978 1980 198 1984
YEAR YEAR
0.18 4.5-
0.16 4.0
0.14
3.5
g0.12
3.0
cm „
(I) 0.08
L_1
0.06
0.04
0.02 1.0
1972 1974 1976 1978 1980 1982 1984 • 1972 1974- 1976 197d 198d 1982: 1984'
YEAR YEAR
155
0.14'
0.12-
In r
AJ/
‘‘: v\
/ \
.
n ... s- n
,--, 1
". n t \
\, I \
i ...
\,1
0_04'
1972 1974 1976 1978 1980 1982 1984 1972.- 1974 1976 1978 1980 19821 1984
YEAR YEAR
0.200"
0.175'
m0.150"
'417)10 .125-
&
o_
nt
E 0.100
9
0.075
0.5
0.050
972 1.974- 1976 1978 1980 19821 1984
0 025 YEAR V_
WELLCOME FUNDAT I ON
Y VALUE
-NI/SALES
-NI/SF
-NI/TA-SF
Figure 5.3.6 Testing the Effectiveness of the Model -CASH/TA-CL
---CIA/CL
-WC/SF
-CL/TA
156
F-
0.40
0.35
0.30
:1125
0.15
4.0
0.10'
3.5 0.05
1972 1974 1976' 1978' 198d 1982 1984 97 1974 1976k 1978' 1980 1982 1984
YEAR YEAR
0.00f1
0.007 /
tr\ /-‘
\,/
0.006 /
\J /
20.005 /
co
20.004'
in
cc
'O.003
0.002-
1972 1974 1976 1978 1980 1982 1984 1974 1976' 1978' 198d 1982 1984
YEAR YEAR
157
5.5'" 0.250F
-..7
'-]
14. 0
i 1:
E 0.150-
3.0 0.125'
/ 5.
0.075-
1974 1976 1976 1980 1982: 1984 1974 197d 1978' 198d 1982 1984
YEAR YEAR
2.50-
/-- -'-- N
0.250-
/ .
/ \
0.225-
-N
/ \_-
/ \
/ /
0.20T / \
0.175-
(20.150
D A 25
0.1.00
0.075
O. 75-1
0.050
0.50 7-`----"Y
1974 1976' 1978' 198d 1382' 1984' 1974 197d 1978' 198d 1982' 1984
YEAR YEAR
158
0.35-
6.0
0.36 \
5.5
0.25
5_0
t.L1
g4.5 - 30.20
:k
60_4.0
a-0.15
3.5
0.10
3_0
2.5 _
0.05
1974 1976 1978 1980 1982 1984 1974 1976' 1978' 1986 1982 1984'
YEAR YEAR
(LT
1.0
0.8
er.
-j
• _ - 0.6
Li
LE) CD
FL; 0.4
ct
0.2
0.2
159
0.18'
lr
0. 18'
i , \I\ 0Z
0.14 n
" n \ 7
DO12
-.-\
.t /\ / \/j/I
\\ \ i /
-1'1On0..10 \ '
t
E %1
2.0 .
008 ‘V/ //-
k \
t /
--. \ /
0.06' / /
1.5
0.04-
972. 1974. 1976' 1978' 1980' 1982' 1984 1972 1974' 1976 1978' 198d 1982 19E4
YEAR YEAR
2.00-
f' .-
0.200 \ 1.
1A1, 50 - ......
0.175
N
t i .....- ,.
1 --1 1.25'
6 0.150 ii1 1 cc
t.-,.
\ 'cc 1.00
/ 7.1-
7 -,\ ,,./1 I IL)
t..
% ,......
0.75'
/ .I /
.,: %...-- . 1 1 cc
0. 100
..- J / '9 0.50'
0.075 0.25"
PEARSONS Y VALUE
- NI/SALES
-NI/SF
-NI/TA-SF
CASH/SF
Figure 5.3.10 Testing the Effectiveness of the Model -CF1SH/TR-CL
— CA/CL
-111C/SF
--CUTR
160
7
0.4
0.35
0.30
:EcEl 0.25
Lj
1974: 197e 1978' 198d 1982: 1984: 1.974 1976 1978 1.980 1982 1984
Y.EAR YEAR
/
0. 25-
—
0. 20:- 11\ 2 .0- \
I-...' 0-
Ct
cn 1.0
V
CC
LJ
0.10 _
0.5
0.05-
1974 1979 1978: 1980: 1982: 1984
19 -4 1979. 1979 i980: 1982': 1984' 0-. 5
YEAR
RACAL ELECTRONICS
1 VALUE
-NI/SALES
— -NI /SF
-NI/IA-SF
—CASH/SF
Figure 5.3.11 Testing the Effectiveness of the Model - CRSII/TR-CL
— — — CA/CL
-NC/SF
CL/ TA
161
F-
4.0
0.3C
3.5
0.25
LL13.0
'21 _
17;0.20
IL
ES2.5
0_
c-0.15
c
2.0
0.10 /
••
1.5 •
0.05 _
1974 19767, 197d- 1980' 198 1984' 1974 1976' 1978' 1980' 1982' 1984'
YEAR YEAR
0.200-
r
1.8 /
0.175- \\ / \_,--
0.150-
.90.125
If
n
Ro.100-
"
'0.075
0.8
0.050
0.02.5
1974 1976' 1978' 1980' 1982' 1984' 1974 1976 1978 1980 1982 1984
YEAR YEAR
162
5.0
4,5
tA.1 4.0
I3.5'
'at' 3.0
\ , --- , .
\ / / \
\ / ,--- \ /
0.1 .
---_-- -' /,
0"
\
1_5 \ /
1974 1976' 1978 1980 1982 1984 1974. 1976' 1978 1980 1982: 1984'
YEAR YEAR
,\
/
/
a.0 / \ / \
/
/ 1 / \
,--... / \ /
_,L.5' ," ----.
F-
Im .....
L:
ES
,9 1.0
z
--\
' '..\
115-
163
4.0 0.30
0.25
PE
8E 0. 15- \)/
Th
2.. d
0.10
1 .5-
19721 1.974 1976' 1978' 1980 1982 1984 19721 1974' 1976' 1978' 1988' 19821 1984'
YEAR YEAR
0.05'
2_75 f\
2.50-
I\
I 1
1
1 \
0.04L
2.25- I \ 1 \
1 V
a.4. 2_00-
E. / ,
•175' / \
I
/
cm
i)\ z. / \_„..•
1.50
c m
i=i ..
1.25
/
1.00 t
0..01 \
.. ._
0.75'
9721 1974 1976 . 1978: 0.509721 1974' 1976 1978' 1980' 198211984'
YEAR YEAR
164
0.35
t
6.0 I
0.30
5.5 (
5.0 =0.25 (\
4-5
0.20
6`
SE
0.15
0.10 /
0.05
1974 1976 1978 1980 1982 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
/ '.- ---..N.
,, / \ \ /----
\ /
1.6- \ /
0.6-
0.4
N.
1974 1976 1978 1980
1982 1984 1971 1976 1978' 1980' 1982' 1984'
YEAR YEAR
Y VALVE
BOOTS CO PLC (THE) -NI/SALES
- --111/SF
-N I /TFE-SF
---CASH/SF
Figure 5.3.15 Testing the Effectiveness of the Model -CRSH/TR-CL
CA/CL
-111C/SF
165
0.6
0.4
/ /-\
.--\\
- -KW" • '-
74 197 978 1980
„
0 -.4
0.05-
0.04-
6
_
_.
i- l \
La,...
cL. / I
z 1 ,
5)
0.02 / ii, (/ \\
,
\J , , \ f_
, ,
,
0.01 •
,.... ...
_,
1974 1976 1978 198d 1982' 1984 1974 1976' 197d 1980' 1982 1984
YEAR YEAR
-WC/SF
166
0.50
0.45-
8- 0.40
•
0.35
0.30
1E0.25
-0.20
0.15
0.10 •
- //-\
0.05
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1.878 1980 1982! 1984
YEAR YEAR
0.4 2.5
/-•
0.40
-
0.30
E0.25
0.m
0.15
___
0.10
972! 1974 1976! 19?8 1980 1982 1984
0.05 YEAR
167
0.1
YEAR
97 1978 1981 198
0 , .....„ , •
r 0- . 1 - ' 1
\ s- - - I ‘\\, 11
7
,.! \,._i L__/
I
0-.3
\I
0-.4 \J
0-.5
0.050
I'
2.25-
0.045- I
/
I , \ 2.00-
I
0.040- 1
• I l\, 1
0.035-
c%
li
7
E0.030-
cn
o
0... _
0.025 /I \\
cut'
1
Li0.020-
II
0.0,5-
L\
_
i
0.75-
!I_
0.010- _I
-.1.
\\ , r. - 0.50-
0.005" '.-.-
972 1974 1976 1978
198d 1982' 1.972 1974 '
1976 1978 198d ' 1982'
YEAR YEAR
168
0.18
0.16
0.14
[1.12
R0.08
n
0.02
197 1974 1976' 1978 198( 1982' 1984 197 1974 1976' 1978' 198d 19E2 1984
YEAR YEAR
N
\ _ __ N z
1.4
0.16-
\ / '
0.14 1.2 \. /
=
co
60.M
0.0 6 /
-- 7
/
0.04
z 0.4
169
1972 1974 1976 1.918 1980 1982 1984 972 1974 1976 1978 1980 1982 1984
YEAR YEAR
0.12- 2.0-` / NJ
17 0
2.5
0.200-
0.175
2.0
>_ 0.150
iTa.125-
0.100-
0.075-
0.5- 0.050
0.025-
1972 1974 197d 1978 198 • 1982. 198.4 972. 197.4 1976 19714 1980 1982. 198.4
YEAR YEAR
0.07
0.06-
/ !
A / \._ _ / I \
0.05- 1.6- / --
z-: I
in 0.04 Li
\
3 0.03
0.02- 0.8
0.6- , ----", / \ I
0.01- X %
0.4-
1972 1974 1976 197d 1980 1982. 1984' 1972 1974' 1976 1978' 198d 1982' 198.4
YEAR YEAR
171
0.200-
0.175-
0.150-
LU
:1
0.125-
(7.1 PE
LJ- -
fa- N.100
0.075
0.050-
'- 0.025
1972 1974 1976' 197 g. 1980' 1982' 1984' 172 1974 1976' 1978' 1981 1982. 1984
YEAR YEAR
,,„
0.25-
3.0
2.. 5
0.20-
/
•• n•
0.5 -
0.05-
1974 1976 1973 1980 1982. 1984
—YE
1972. 1974- 1976' 1978 1980' 1982' 19841
YEAR
172
0.200
0.175
0 150
'6E1
- '0.125
FE
V \ \\
'60.100
‘--K)
\j
0.075- \\.
0.050 /
0.025-
972 1974 1976 1978 1980 1982 1984
YEAR 972 1974 1976 1978 1980 1982 1984
YEAR
0.250
1.8
I
0.225-
1.6
0.200-
I
I I 1
I/11
1.4
2,0.175 II \II
_t
FE1.2
E2
!=.0.150-
C)
co
0,_
Ii \\ co
ml1125
(r,
m
It tI 1.\
c..) _
t
0.100 III ir
0.6-
Ii
0.075- ) \ 11
,
, I/
/ j
9 0 .4- -•
t 0.2- \,/
---•,..._.../...,"
0.025
972 1974 1976' 197d 198d 1982 1984 97 1974 1976' 1978' 198d 1982' 1984
YEAR YEAR
173
F-
0.5
, ,
,/ \
0.45 i ' .-____J. 1
I
i
I
0.40 ./ 1
›.-
0,35 f
7' 1
i
.IEd
FCE 0.30 /i \I
20.25 -- I
/ \
/ / I
4
0.20
/
7--- .---/ \ ,
/ .
.. --
1972 1974 1976 1978 1980 1982 1984 1.972 1974 1976 1978 1980 1982 1984
YEAR YEAR
0.9
1\
0.8 / \
/ 1 /'' \
/
/ I
0.6
D I
r- I
(.710.5
en' 0.4
Li
0.3
fj 972! 1974 1976,...----1478. 1980 1982' 19E14'
0.2
\J
•
0.1 0-.50-
1972:. 1974 1976' 1978' 1980 1982 1984
YEAR
174
0.1
0 -.4
0-. 5
1.4
0.06-
1.2 \
0.05 N
_ j 1.0 ,.__. /— --
6 m
1-- \ /— — N
N\s)
.L7). 0.04
i\ I eff 0.8
p
m
F., 0.6
\J
'60.03
ji C)
- 0.4
0.02-
\ 0.2
175
1 .6-
0.20-
1 .4-
1.2-
1 . 0-
0.8
0.6
0.4
0.05 1
0.2 /
0.12 1.50
I\ - - '
•
•••.-
0.10
I`, I I. Lou-
I! V\1
n0.08 ()\ I \ \ e.... 0351
L71-
i
It
i t %
iIi
i
\ (-) CM
0.50-
1"0.06 Z
176
0.250
3. - /e\
0.225- I
I
I I
3.0 0.200- I
0.175-
!]0.150-
2'0.125-
u_
E0.100-
1.5 0.075
0.0511
1.0
0.025- ./
1974 1976 1978 1980 1982 1984 1974 1976 1978' 1980 198 1984
YEAR YEAR
I\
0.07 I
,' —\ I' 1 \
2.0 1
\ I \ 1
0.06 / \
/ 1
\ - / \ \ ...... 1 ‘.....„-\
k
z
o 1
r-o.o5
c,
2
C-),
= / / \
Ili
//11/1
: I\ i
0.03
i
0.02 / 74r
1978 1980
\
1982 1984
0.8-
0.6-
177
3 .0- 0.4
2.5
2.0 0.3
1.5
_
F.5 0.5
0-.1
- 1.5
0.10
/
0.09 t‘
i /
0.08 \/
1.4-
z
Q
0.07
1
1r
r
\ \ _r _
0.06
;I 1 i a-
cc
ii
CL 0.05
=
U)
11 \\
C2
60.8
(LE, 0.04
\ n
0.03 \i 0.6
0.02 0.4
\\
0.01
‘ 0.2 z
1972 1974 1976 1978 1980 1982 1984 972 1974 1976 1978 1980 1982 1984
YEAR YEAR
VALUE
FORD MOTOR CO. LTD.
-NI/SALES
--NI/SF
-NI/TA-SF
---CASH/SF
Figure 5.3.28 Testing the Effectiveness of the Model -CASH/TA-CL
-----CA/CL
-61C/SF
178
3.5 0.20
0.18
3.0 0.16-
0.14
r1-0.08
0.06
1.5
0.04
0.02- -
1 01
1972. 197.4.- 1976 1978 1980 1982 1984 1972 1974 1976 1978' 1980' 1982" 1_984'
YEAR YEAR
0.02.00
1.75"
0.0175 \
/ 1.50 \ /
i
0.0157 1.25-
Z '\i cc
.90.0125 1.00-
I— cL
....,/ \ liV i" \ :\ CC
U7
20.0100-
ii 0.75-
i1 V
0.0050 I 11 (--- \,
I il 972 1974 1376 1978 1980 1982 1984
YEAR
0.0025-
0-.50
YEAR
179
0.30-
0.25-
..---
2
1\ /
/ \ /
1 % /
0.05- n /
1 .- ...
1972 1974- 1976' 1978' 1.986 1982 . 1.9E14 972 197+ 1976 1978' 1900 1982 1984
YEAR YEAR
0.14 2..5 I
\
\
0.12-
24 \
/.•
0. n /
8"_
m n
(--'1.
m
(I-)
1
0 ix
50.06- C)
I
1.0 ,--..
0.04-
0 .02
\
,-, y/ ' - /
/.,...--- ---t-. ,
7
-
fi 1 \
0.5
n
n
n
, -N,
1972 1974' 1978 1978 1980' 1982 1.984 1972'. 1974 1976 1978 1980 1982 1984
YEAR YEAR
180
F-
5.0- 0.30-
4.5
0.25
4.0-
\
,I' 1
1
k
1
0.10-
0.05-
1974 1976 1978 1980 1982. 1.984 197.4: 1976' 1978' 198d. 1982 1924'
YEAR YEAR
i
3.5- ip.. \ / \
/ k / i / ---. .....
1\ / 1 C n
i \
0.02T 3.0.- n / N • . -..
...
\ i \
1
F.0.02C 2.. 5
0_
(T)0.015
1
CC
0. 0 10 1.5-
1 .0-
0.005
--
0 .5-
1974' 1976 1978' 19El8' 1982 1984' 1974" 1976' 1978' 1380' 1982". 1984'
YEAR YEAR
181
0.15
1.50
0.1.0
1.25
1. 00 >_ 0..05
17-
0-.10
972 1974 1976 1978 1980 1984
YEAR
0-.25
0-.15
0.250-
2.0
0.225-
0.200-
1.5
60.175-
I--
'&10.150-
C)
-
a_
-
Ei0.5
12 1
Lt
II \
0.100-
%
i
0.075- I/
— / \71; •
0.050- 972 1974 1.976 1978 1980' 1982' ,38\4,
N;.--'• " YEAR
0.025-'52
1972 1974 1974 1974 1980 1982 1984
YEAR
182
4.0- 0.200
0.175
3.5-
015T
t;:;3.0
630.125 Ai1\ //r—\ \
I1
0. 100
1k
\ _I/ -. /
i j/
0.075
_
...\ \ I
1.5- / ..- n f
0.050 \\ \.__--/ /
/ ‘
\t
\ r
0.025 .
--
1972 1974 1976 197d 198d 1982 1984 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
\
'•••n
0.25
0.20
_
R0.15
CT,
0.10-
0.05
0.4-
1972 1974 1976' 1978 1981i 1982' 1984 197 1974 1976 1978 1980 1982 1984
YEAR YEAR
183
0.14
1.6
0.12 \J
1 .4- rN.,/
0.10 \
t±j1.2- 0.08
cc
:7. 0.06 - -S.
A- 0.04
0. 8- 2/r\\
0.02
0 .6-
972 1974 1976 1978 19 982 1984
0 .4- YEAR
0-.02
0.10 1.8-
;\ / \ / \\
0.09 / \
1.6- / \ ,
\ /
0.08
-- /
\ /
1.4-
=0. 07 \.1
1 cc
I
t,10.M cc
;0.05 /f.\\
I
_
0.04 0.8
t
0.03
0. 6
V--
0.02
0 . "Th
0.01 1976 1978
1972 1974 1 . 980 1982 1984 1972' 1974 1976 1978' 1980 1982 1984
YEAR YEAR
1 84
0.30-
0.25'
>-0.M
0.10
- _
0.05
1974 1976 1978 1980 1982 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
0.14 1 0.8
0.12 0.6
n=0.10
61
dt 0.08
1
83
Li
0.06 \\ 1974 1976 1978 1980 '1982 13 ?4
YEAR
0-.2
0.04 ie.-
0-.4
0.02
0-,6
1974 1976 1978 1980 1982 1984
YEAR
185
F-
1.75'
0.75'
0.50'
0.25"
0.09 \./""\
1..6 /I
0.08
0.07
g30.05
CL
0.03
0.02"
0.01
rA
197 1974' 1976: 1978' 1980 1982 1984 1974" 1976' 1978 1980 1982 1984
YEAR YEAR
186
4.0 0 1
--
3.5
0.10
3.0
0.05 s'‘
2.5
0.18' ,
/ \
A / \
/ \
0.16- t - - ----\ 1 \ / \
I 1.8 \ / \\,./ \
0.14- \., \
P0.12'
I\ FE 1 .6
u '
D i II \ % ES
=. 0 10 2 1-4
=
cn
LJ
/,\ 1 \' 01
I k 1.2`
0.00- i \ Ili \;
\
0.06
/
1
\ N
'' iI \\
1/ V \II V\ Hi-
---\ i •-•
0-047 ------. \. 0.8 •
1972: 1974 1976 1978 1980 19E2 1984 197i 1974" 1976 1.978 1980' 1982' 1984
YEAR YEAR
187
0.30
2.0
0.25
1.5
,-. 0.20
1=1
,
m
m
o 1 . 0 F-
LL
DI 0.15
Lálj_
IT
0.5
0.10
0.09 - -
0.08 /
I 1
ii\I
2.0
0.07
z
cp
F.r.
0.06
i
ii
/
f/
7'..\
'6;0.05
(7)
a_ ill
/ \
ai 0.04
//
ct
03
0. I 7. \
0.02
/ / A / 1972 1973 1974 1975 1976 1977 1978 1379
0.01 //
- - USRLES
- - -N
441/SF
-NI/TA-SF
— —CRSH/SF
Figure 5.3.38 Testing the Effectiveness of the Model -CASH/TA-CL
— — — — CA/CL
-WC/SF
CUTR
188
3.5 0.15-
0.05'
0.18-
0.16'
\
‘‘. I \
c\ r
• / ——
30. II \---i \\
it/
189
3.5 0.3
3.0
0.2
2.5
cu 2.0
E 1.5
0-.1
1972 1974 1976 1978 1980
YEAR
0-.5
0-.2
0.06-
2.0-
0.05- 1.8- /
i
_r 1 . 6 - /
CC
E, O. 04-
/\
1— :*:) 1.4
\
cn
C)
10.03-/ g 1.2
Ln
ct
r‘`,\ 1 '-'
cc
(_) i r ' ‘-j
f
0.02/
0.8
0.6
0.01-
0.4 ,
197i 1974 1976' 1976' 1980' 1972 1974 1.976' 1978' 1986'
YEAR YEAR
BRITISH AIRWAYS
- - - - -
Y VALUE
NJ/SALES
-NI/TA-SF
—. —CASH/SF
Figure 5.3.40 Testing the Effectiveness of the Model -CASH/TA-CL
CA/CL
--11JC/SF
19 0
3. 0.25r
3.0
0.20
2. b
1.0
0.5 0..05
nn
n
1972 1974 1976 978 1980 n -
YEAR 1972' 1974
0-. 5 - 1976'-
194
YEAR
-1.0 0- . 05-
0.061
r-N\ \
,.....„ ...... n ....n
•n• ....n.
/
\
%
e-
\ .--..
/
\
‘
\%
If
\
IS
LJ
2
LO
(ctT) 0..03 1 ii
IC
n
n ..............
Li
9 O. 5'
r\
0.02
11‘. //
197
„,.// 1974 1976 1971i 1980
YEAR
0.01
0-.. 5
197 1974 1976 1978' 1980
YEAR
VINERS Y VALUE
-NI/SALES
- -NI/SF
-NI/TA-SF
Figure 5.3.41 Testing the Effectiveness of the Model -CASH/TA-CL
CA/CL
-11.1C/SF
--CUM
191
F-
0.20
uu r=
LJ
z --I 0.15
mcc
E'
E
tr 0.10
oL 22
1972 1974 19 1978 1980°-
YEAR 0.05
- - --
1972 1974 1976 874--
, / 1980
Y EAR
0 -.05
0.20
1.6
/
0.18 /
1.4 / I
0.16 / I
1.2-
0.14 _
;720.12 \I
'6;
R- 0.10
lt
u/
50.08
0.0G 0.4
0.04
0.2
k
0.02
197 1976 1978' 1980'
1972 1974 1976 1978 1980 YEAR
YEAR
192
0.1
0.10
0.05 •••.
YEAR
1973 1974 1975 1976 1977 197 10
0,5
itnrs /1
197.
--J
;30-.05 ii
g
m F--
0-.20 I
-1.5
0-.25
0-.30
1.75
0.10 0 1.50
N,
1\ 1.25
...•••••
o_oe''
i \ e 1.00
.
;::: , I ' \ 1
'..jo..136 0.75
0_
--
, --,
t
u, 11( \\ /
ct II
'. 04 1\
0.
11 0.25 -. ,.../
'11 \
il
1972 1973 194 1975' 1976 1977 1976 19.1i
0.02" II YEAR
0-.25
/‘,...._./
3
1972 197 ' 1974 1975 1976 197f 134 1.34
0-.50
YEAR
193
0.20
2.0
0.15
1.5
0.10
1 .0
e:
n 0.05
I0.5
LT: 1973 1974 1 1976 1977
YEAR
'980
0-.5
0-.10
0-.15
0.0200
0.0175'
0.0150- 1.
I‘
20.0125
c-
ZTri
20.0100\ //(\
u-)
cc \ g
(-10.0075-
0.0050'
1973 1974 19/5 19/6 19/7 19/8 1979 1980
0.0025- kt: YEAR
19 4
0.25
0_
0-.10
0.040
0.035
A
0.030
6 i \
8a_ 0.025
±0.020
to ili \
L,
' -_ii \
0.015
:
i
i
0.010
\ 972 19(3 1974 1975 19/6 1977 1918 1919
YEAR
0.0(6
1972. 1974 1974 1975 1974 197i 1978 ' 1974 0-.5
YEAR
BURRELL 8, CO.
Y VALU
-NI/SALES
------NIISF
- Nian-sF
----- --CASH/SF
Figure 3.3.46 Testing the Effectiveness of the Model - CASH/TA-a
- WC/SF
195
\
\
0.05 _ _ _ YEAR
197 19-
74 ". -1-976 19-7 198
0 - . 05
a
0-.25
0.14
0.12
0.'
10'
..t°
r=
E0.08
\2i0.6
±: 0.04'
1972T 1976
0.02 1978 1980
YEAR
1972 1974 -1976' 1978 1.980
YEAR
196
0.1
0.10
0.05
0-.15
0-.20
0-.25
0-.30
0.02.00
1. (5- \
0.0175- 1.50-
0.015(1 i\ 1.25-
I'
It
ul ES 0. 75-
20.0100 ,,.
0. 50 -....--"---- -
7=
U/
'0.0075-
11I '\\ '
, \I -\ _ _ __,,/
\
I. I 0. 25 ' .
197
O. 2
0.1
0.2
0.14
0.12
1.
0.10
-.0.08
(-c2 0.06
n
0.04
11111.1 1
1973 1.974 1975 1976 1977 1978 1979 1980
YEAR
0.02
0-. 5-
(
1973' 1974 1975' 1976. 1977 1978' 1974 1980)
YEAR
RIRFIX INDUSTRIES
- -
Y VALUE
- - - -N I /SALES
-NI/SF
-NI/TA-SF
— —CASH/SF
Figure 5.3.48 Testing the Effectiveness of the Model -CASH/TA-CL
— — — CR/CL
-WC/SF
CL/TA
198
0.030 L.50-
1.25
0.025'
1 .00'
E0.020' 0.75'
ii
i=7 ii ii
cz) 0.50"
=0.015
=
Ln
I.
Ir\\ I
0.010' 1972 1974 JO 1979
/
0.005-
199
\
0.225-
/ \
.-- \ / \
0.200- / \
/
-
3 6' / \ / \
0.175 / \ / \
ccs 2.5`I
— 1 I \
o
r= 0.150
F--
\ . i \
.... ___) \
174 cct
ID
-0.125
L5
ct .
'0.100-
O. 075'' _
0.5
0.050-
19JEL.- • 1980'
0.025- YEAR
• 1974' 1976 1978 1980'
YEAR
200
O. _
0-.
0-.4-
2.0
r---------- \
0.030 -
\
/ 1.5
--_--/ /
\
0.025- \
I
\
..j LO
z . \ cE \
I
p0.020- .L-.-- \
\ \ t
I S 0.5 \
o _------
a..
LT, 0_015' 1- n .--!
Ct
I-3 C\ / ‘ \--/..-. \ \ 5) 1972 1 978 _ 1 BO
74 ---- YE94
19---- 16 _ _No
i \
0.010
0-.5
•
0.005"/
xi -1.0
201
YEAR
.—\
0.30- /— \
/ \ 2.5 \ /
\,/
N-
0.25
/// /.\ \ —l
ca
2.0
i /7 \
\
F---
';
a
..
c_)
1.5
i /
/ \ % 1_0
,T)0.15
Li
\\ %
0.10-
I
\k
1972: 1974! • 1976 1978. 188d
0.05 YEAR
- 0-.5
1972 1974 1976 137E1 198O
YEAR
202
/-\
0.1
— — 19-7 —i'80
0 - .1
r.
j.-1 10-.2
i CIS
cc
LL, -2 t 0-.3
1.
m
`12_3
0-.. 5
0-.6
0-.7
2.0
0.12'
0.10'
z.
p0.08-
J: 0.06
uo
Li
0. 04 /— —
, •
19761374! • 1978' 19e0'
0.02' YEAR
0-.5-
• 1974i- 1976' is7d /980'
YEAR
AUSTIN(F.)(LEYTON) Y VALUE
-NI/SALES
-NI/SF
-NI/TA--SF
--CRSH/SF
Figure 5.3.53 Testing the Effectiveness of the Model -CASH/TA--CL
----CR/CL
-WC/SF
--CUM
203
5.3.4 OVERALL EFFECTIVENESS OF THE MODEL
position and working capital for each company and over the
P - profitability
CP = cash position
WC = working capital
204
I I
Figures P CP WC I AOP IY-valuelModel Effectiveness'
+
5.3.5 I up I up I up I up up excellent
5.3.10 I up I up I up I up I up excellent
5.3.19 I up I up I up I up 1 up I excellent
5.3.24 I up I up I up I up I up I excellent
205
5.3.25 I up up I up I up I up excellen
5.3.28 up up up I up up excellent
5.3.35 I
1
down down 'static I
1
down I down very good
5.3.51 down I
1
down down down down excellent
5.3.52 down I
1
down down down down excellent
206
For classifying the effectiveness of the model the
1) if P + CP wc U = Y-value
3) if P CP + WC = Y-value
4) if P + CP If WC (static) = Y-value
or P CP + WC = Y-value (static)
207
When the effectiveness is around 66% it is called 'bad'.
5) if P + CP li wc 11 Y-value
total 53 47.52 1
208
5.4 CONCLUSION
performances.
performance.
209
CHAPTER 6
210
CHAPTER 6 : PERFORMANCE CLASSIFICATION AND COMPARISON
comparison.
equation:
Y =a +aR +aR+ +a R
0 11 22 10 10
and compute the Y-value for each company and each year
213.
• =b
1971 1
• =b
1972 2
• = b
1973 3
• =b
1985 n
mean = m = (b + b + b + +b )/n
1 2 3
effectively they were doing in the past. This mean value can
all the Y-value's below the mean are classified as the poor
D = b -m
212
different categories such as:
1)
if D>0
and b >0
companies.
2)
if D<0
and b >0
3)
if D<0
and b <0
companies we have:
20
well performing=Z:b /20=66.486/20=3.3243
j = 1 nj
213
fair performing4
15
--b
/15=28.4912/15=1.899
j=1 nj
group=(3.3443+1.899)/2=2.6
group=(1.899-2.143)/2=-.244
lines as follows:
2.6
-.244
have:
214
Table 6.1.1 Applying the new classification to the sample
companies
WELL 16 0 16 1
FAIR 21 21 1
POOR 16 15 1 1
correctly.
2) Coalite Group
6) Wellcome Fundation
215
10) Pearsons
216
C) POOR PERFORMING COMPANIES
February 1981)
1980)
February 1982)
January 1981)
August 1981)
217
50) Lesney Products & co. (Receiver appointed 11th
June 1982)
1981)
July 1982)
218
advance of failure. The idea was that, for example if current
(two studies)
(three studies)
prediction of failure.
219
of failure, in some cases up to five year ahead, and all cases
7) (sales+change in inventory)/inventory
10) sales/debtors
companies in his sample had at least one weak ratio, some had
two and even three. He concluded that the analyst can not
failure. He also found that the mean of total debt over total
assets of the failed firms was 0.79, whereas that of the non
220
characteristics of the company failure.
221
Altman assigned weights to each of his ratios, as below:
weights
factor:
222
Table 6.2.1 The Predictive Accuracy
223
On the basis of these studies, it appears that financial
than 1.5 which is called under liquidity and they all had
payment difficulties.
224
Table 6.3.1 A comparison of current ratios with differing
5.3.1 to 5.3.53.
225
Table 6.3.2 A comparison of profitability ratios with
+ +
1 1 1 1
1
1 excellent 1 good 1 deficient I danger of 1
Martin & Scott (1974), Pinches (1975), Mao (1976) and Belhoul
(1983).
+ +
1
'cash position lexcellent Ivery good good I bad very bad 1
1
+ +
+ +
Performance Models
1 authors year area of study 'classification 1
1 accuracy 2'
1 Haslem & 1
1 Frank & 1
1 Klekowsky 1
1 Schick & 1
1 Betts & 1
228
Betts' model was designed for the restricted purpose of
229
6.4 CONCLUSION
The average performance of the company over the years was used
230
CHAPTER 7
PERFORMANCE STABILISATION
231
CHAPTER 7 : PERFORMANCE STABILISATION
performance period.
232
F = .60132ZR + .4056ZR
1 2 7
F = .49905ZR + .50836ZR
2 5 8
F = .53485ZR + .4632ZR
3 1 3
F = 1.07767ZR
4 9
F = .82264ZR + .15715ZR
5 6 10
to
have
F = 7.627R - 2.887
4 9
233
F = 7.627CL/TA - 2.887
4
F = 1.04CA/CL + 1.23(CA-INVENT)/TA
5
D?,0
and b - 140
b =M
that
M 0
or simply
7.627CL/TA - 2.887 = 0
1.04CA/CL + 1.23(CA-INVENT)/TA = 0
234
Finally the ideal values for four important and
calculated as follows:
9.96SF+3.83SALES)
better than the ideal value and negative direction (-) for
each value below the ideal value (except for CL). By doing
the above classifications for all the cases which are the
following tables.
235
Table 7.1.1 Comparison of Ideal Path with its Actual Path
General Electric Co + + +
Coalite Group + + +
Wellcome Fundation + +
Marks &Spencer + + +
Pearsons + + +
Racal Electronics + + +
236
Pleasurama plc + +
Bestobell plc
British Airways
Viners
Amalgamated Industrials - -
Airfix Industries -
237
1
Norvic Securities 1 1
-
1 1
1
Austin (F.)(Leyton) 1
-
1 1
-
1
of working capital, 88% of the net income and 63% of the cash
cash are below their ideal paths. It means that all the
Exce lent E
a) a)
o 0
O 0
0 Good dG
E m
o 0
4-1 Poor clAp
;-I
a)
k
a)
fa4 1:14
Fai F
-----..,,
Time . s
Time
. "- )1,-
Time Time
Type 1 Type 2 Type 3 Type 4
238
Type (1) failure should be preventable at the
established business which has not 'moved with the times' and
their activities, but we are able to keep the fair and well
239
Table 7.2.1 Performance Improvement Recommendations
Wellcome Fundation CA I
466500
I
489621
NI 31600 I
37121.4
Cash I
116 I
856.3
Pearsons CA I
471434
I
511465
BPB CA I
215500
I
284238
Cash 3900 I
15253
CA 48089 I
53810.1
Cash I
9000 43307.1
Cash I
30300 261667
Cash I
448 I
1458.8
241
Babcock International plc CL I
349000 1 26 54
NI j 24800 1 50803.4
NI I
3890 1 17486.6
Cash I
6517 12876.5
NI I
992 I
1642.9
Pleasurama plc CA I
15424
I
67990.6
NI 97300 1124287.2
Cash I
27100
I
61619
NI I
7999 I
10497.4
Cash I
3984
I
6713.2
NI I
45000 1179715.6
CL 4617 I
3917.6
NI 413 I
808.3
Cash I
2 I
405
CL I
36837 I
35482.5
Cash 16 1
3134.4
NI I 169 I 467.6
242
Cash 43 3 .4
NI 0 81.6
NI 439 994.8
NI 1217 7548.5
CL 19087 10528.4
NI 1260 3336.4
Cash 2 1111.4
+
7.3 A GRAPHICAL ILLUSTRATION OF IDEAL PERFORMANCE
fair, and poor performing companies. All the ideal paths are
the top left hand side current assets is plotted with its
liabilities with its ideal path, on the bottom left hand side
is net income with its ideal path and on the bottom right hand
than their ideal paths, which means that the working capital
net income and its cash are both well above their ideal paths.
244
This evaluation shows that the General Electric Co is doing
very well in working capital, net income and cash, and the
liabilities are nearly the same as their ideal paths and its
net income and cash have gone under their ideal paths. This
while the net income and cash are both declining but they are
bad.
than their associated ideal values and its net income and cash
are also far below and worse than their ideal paths. This
means that this company's working capital, its net income and
245
The difference between cash graph in Figures 7.3.1 to
that the first one shows the total cash held by each company
at the end of each year and second one is equal to the ratio
graphs.
246
4.0E6
1.8E6-
3.5EEi 1.6E6- /1
/-- - - in 1 . 4E6-
3.0E6 LLI / ?'"1
/ '
LL
H
- :1.2E6
ui ///
T. 2.5E6 /
1-- ::j. 1.0E6/ /
/
E //'
cc / /'
,/
u
2.0E6
,. /
/
LI:10.8E6-
a-
(--) 0 . 6 E G-
/
1 . 5E6- .
0.4E6-
1.0E6
0.2E6-
1974 1976 1918 1980 1982 1984 1974 1976 1978 198d 1982 1984'
YEAR YEAR
1.2E6
4.0E5
1.0E6
3.5E5
3.0E5
(75
W 2.5E5- (.--- Ln
i
; Z‘.. 5 0.6E6
Lu
2.0E5 !
/ /
0.4E6
1.5E5-
GEACJ
GENERAL ELECTRIC CO -CL
—
Figure 7.3.1 A Graphical Illustration of Ideal Performanc -NI
•- — OCASH
-CASH
247
1.8E5
80000-
1.6E5
70000-
1.4E5
Ln
1u. 60000
E1.2E5-
Ln
1.0E5
Lu
z'
40000-
0.8E5 Li
L_)
0.6E5 a 30000-
0.4E5- 20000-
-
0.2E5- 10000--
1974 1976 1978 1980 1982' 1984' 1974 13 S 1378 1980 1982 1984'
YEAR YEAR
30000-
18000
16000 25000-
14000'
20009-
12000'
Li
— 10000- (cf, 15090
I--
/7
Li 7-
8000-
10000
6000-
4000'
2000'
1974 1976 1978 1980 1982 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
COALITE GROUP COME cn
-ocn
Figure 7.3.2 A Graphical Illustration of Ideal Performance
-CL
— —ON!
-N
OCF1SH
-CASH
248
35000- 14000-
30000
12000
u-)
Li
U,
25000
Lc:2
("-x -',c. ;1• 10000-
/
\I
La=.I 20000
a-.
I_TJ 8000
Li
15000-
Li 7;"\
6000-
10000-
4000-
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1978' 1980 1982 1984'
YEAR YEAR
2500 2250 i
t \ i \
2250 2000
I /...\
..
r
: 1
2000 1750- 1 s \
1 I
Li
1750 ,.. 1
1 1500-
I
\ /
/
1000 750
•50 500-
500 250
1972 1974 1976 1978 1980 1982 1984 972 1974 1976 1978 1980 1982 1984
YEAR YEAR
21+9
200000-
1.2E5-
175000-
E.11.0E5
V2150000-
PIET
125000 !-21
=
100000- tri'i 0 . 6E5
cr.
Li
75000-
0.4E5
50000-
0.2E5
25000-
1974 1976' 1978 1980 1982 1984 1974 1976 1978 1980' 1982' 1984'
YEAR YEAR
I/ 70000
35000-
/
t
60000
30000-
50000
u, 25000
Ei
Li
FA 40000-
—20000- I Li
Ui
30000
15000-
20000
10000-
10000-
5000-
1974 1976' 1978' 1980' 1982' 1984' 1974 1976 1978 1980 1982' 1984'
YEAR YEAR
•
250
1 ,6E5- 90000
1,4E5- 80000-
1-13 70000-
1,2E5-
LU
---160000-
1,0E5- 22.
0. 8E5
50000- ,
/
\1
Li cc 4 0000-
(X
Lij
0.8E5-
Li rr---\
30000-
J
0,4E5- 20000-
10000-_
I
1972 1974 1976 1978 1980 1982 1984 19744 9841
1972 1 1976 1978 1980 1982
YEAR YEAR
20000
25000-
17500
15000 20000-
(512500
,15
1 : 15000-
Li
g 10000
I
7500 10000-
5000
5000-
2500 —
972 1974 1976 1978 1980 1982 1984 1972 1974 1376 1978 1980 1982 1984
YEAR YEAR
251
3.0E5-
4.5E5
4.0E5 2.5E5
tr)
LU
,3.5E5 _
LU
_
2.0E5
tcf-'. 3.0E5 'Er3
cr.
1 . 5E5-
u.;
cc
2.0E5 LU
er 1 . 0E5-
1.5E5
/
1.0E5
0.5E5._
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
1.0E5
35000 0.9E5
30000 -
/1
/ 0.8E5
0.7E5
Lu 25000- ,,,i.'---J
E i 0.6E5-
U i I 2:
• _ .
_... 7t.._
Lt.)
20000- E9 0.5E5
z
/ //'./' 0.4E5
15000-
V 0.3E5
10000- 4
0.2E5 -
_
0.1E5
5000
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1918 1980 1982 1984
YEAR YEAR
252
16000- 8000-
14000-
" 7000
tri
Li
E 12000- ;726000-
cc
5000-
'2 /0000-
cr.
LEV 400C
Booci
3000-
6000-
2000
4000-
97i 1974 ' 1976' 1978 ' 1980 ' 1982 ' 1984' 1972 1974 ' 1976 ' 1978' 1980 1982 1984
YEAR YEAR
1800-
/60C
1400
/
//
/
\ •
\
\
•
I
1\
.1
%
900
800
700-
\... I.
LIJ
600
E, 1200-
tT) 500
1-- 1000
400
,/
800-
300
600 200
400 100 /
972 1974' 1976' 1978' 1980 1982 19841 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
2 3
F-
8E5-
I .2E6
7E5-
1.0E6
c.n 6E5
LI;
'lt 4E5
6 0.6E6 /
Li
3E5-
///
0.4E6
2E5- Ji
0.2E6
1E5--
1974 1976 1978 1980 1982 1984 1974 19761- 1978 1980 1982 1984'
YEAR YEAR
2.5E5
1.6E5
1.4E5
2.0E5
1.2E5
w
CD
0.8E5
1.0E5
0.6E5
0.4E5 0.5E5
0.2E5 -
'-
1974 1976 1978 1980 1982 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
254
7E5
1.0E6
6E5
o . 8E6
r".". 5E5
(.1) -
MU)
I- O. 6E6 4E5
LU
ix
cr
LU
IT-. 3E5
0.4E6 LU
2E5
0.2E6
1E5
1974 1976 1978 1980 1982 1984 1974' 197E: 1978 198d 1982 1984'
YEAR YEAR
1.8E5 80000
1.6E5 70000
1.4E5 / 60000
614.1.2E5
LU 50000
U)
cr
Lu
1.0E5-
40000
rt
0.8E5 ••n
V 30000
0.6E5-
///
20000
0.4E5-
10000-
0.2E5
1974 1976 1978 1980 1982' 1984 1974' 1976' 1978' 198d 1982' 1984'
YEAR YEAR
255
5.0E5
3.0E5-
4.5E5
4.0E5 v) 2.5E5-
if
E- 3.5E5
21
2.0E5 r
3.0E5 cr.
60000
90000-
80000-
50000
'7000T
u, 40000- 60000-
g!.450000-
L)
ICzi] 30000-
40000
30000-
20000-
20000-
10000- 10000-
1972 1974 1976 1978 1980 1982 1984' 1972' 1974' 19761 1978 1980 1982 1984'
YEAR YEAR
CA
PEA RSONS -OCA
— -CL
— —ON!
Figure 7.3.10 A Graphical Illustration of Ideal Performance -N1
— — (KASH
- --CASH
256
8E5 4.5E5
7E5 4.0E5
I
3.5E5
6E5
cr,
LU .t; 3.0E5
a-.
Fi 2.5E5
..J
I.T.J 4E5
LT, 2.0E5
cr.
3E5
(-) 1.5E5
2E5
1.0E5
1E5 0.5E5
1974 1976 1978 1980 1982 1984 1974 1976 1918 1980 1982 1984
YEAR YEAR
80000
70000-
'70000
60000-
60000 1
LU 50000-
650000
/ 40000-
.,
LU 40000
30000- I.
30000
20000-
20000
10000-
10000
-
1974 1976 1978 1980 1982 1984 1974' 1976' 1978' 198d 1982 1984'
YEAR YEAR
RACAL ELECTRONICS CA
-OCR
— --CL
— --ON1
Figure 7.3.11 A Graphical Illustration of Ideal Performance -NI
— — OCASH
-CASH
257
1 .8E5-
2.5E5 EGET
1.4E5
E. 1 . 2E5
1.0E5
E, 1.5E5
1.0E5 0. bE5
/-
-
0.4E5
0.5E5
0.E5 ,
1974 1976' 1978 1980 1982 1984' 1974 19761- 1978 19801 19821 1984 -
YEAR YEAR
\
18000
50000
1600C1 1'
./
14000-
40000 i
12000 I
8000- ../
0'.
t I
\I
20000 6000-
4000
j
10000-
2000--
-
1974 1976 1978' 1980 1982' 1984' 1974 1976 1978 1980 1.982 1984
YEAR YEAR
— --ON I
Figure 7.3.12 A Graphical Illustration of Ideal Performance -NI
°CASH
-CASH
258
50000- 30000-
III
u., 25000-
40000 u..1
r
f—
in
Lu / I=•
.•.,
/
Ln
ul .i:73! 20000-
cc 30000 cc
:11
LL.I
.
cc Li
Z 15000-
R cl-.
— 20000- a
10000- ,j'
10000
5000-
1974 1976 1978 1980 1982 1984 1974 1979 1979 198d 1982 1984'
YEAR YEAR
3000.
12000-
2500.
10000-
2000
It' BOOT
LU a:
cc
ir)
(--) 1500
LT; 6000-
\
4000- 1 0 00-
I ,r •
,
If
2000- 500-
ii
1974 1976 1979 1980 1982 1984 1974 1976 1979 198d 1982 1984
YEAR YEAR
ALAFY CA
—ocn
ALLIED COLLOIDS PLC
--CL
--ONI
Figure 7.3.13 A Graphical Illustration of Ideal Performance • -NI
— OCASH
-CASH
259
16000
9000-
14000
8000-
12000
Ui
Lr)
m10000 •••
226000-
.:1
LU
E 6000 =
:It 5000-
'4000-
6000
3000
4000
2000-
1972 1974 1976 1978 1980 1982 1984 1972 1974 1916' 197d 198d 1982' 1984'
YEAR YEAR
2250 900-
/- --
2000
800- / -
/
. .- /
700
1750
6U.1 00 -
/ tr\
51500 1 %
Li m _ / t
"(2500 i t
Li /
L:1250
400-
1000 /
/ ,-
1 \
300 - / I 1
I,•\ t t
./ ri-\
750 I
200-'
1 i
1
I
500 100-
%
! \
-1!
1 ,
1972
1972 1974 1976 1978 1980 1982 1984 19741- 1916 1978 1980 1982 1984'
YEAR YEAR
CA
ASH & LAP( PLC -OCA
-0CL
— -CL
— 1
Figure 7.3.14 A Graphical Illustration of Ideal Performance -N1
- - OCRSH
-CASH
260
4.5E5
7E5-
4.0E5
6E5- 3.5E5
`C-nij 5E
5- 3.0E5
In
= CO
cr
:12.5E5
- 4E
5. I-
/ uJ
Li
cig 2.0E5
3E5 Li
1.5E5
2E5-
1.0E5
1E5-
1974' 976' 1978' 1980 1982 1984 1974' 1976' 1978' 1986' 1982' 1984'
YEAR YEAR
II
1.0E5 i i
1.0E5-
/ 0.9E5
0.9E5- / I \
/ I
0.8E5 / I
0.8E5- ,/ 1
L.Li O. 7E5-
tp I
1- --...../-
0.7E5
/
//-.-
1
La I 7.: 0 . 6E5
.va2.
.F-. 0 . 6E5- 1
I-. It Li 0. 5E5 1
/ / 1
0.5E5
,/''' ..." f n
0.4E5 I
0.4E5- /,/ ---' --- r
• ''' .......„../ 0.3E5
0.3E5- /
0.2E5 ,...- 1
,'''
0.2E5 .---- .--- --
0.1E5 -- -
...„-- k
1974 1976 1978 1980 1982 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
261
1.0E7- 7E6
0.9E7-
6E6
0.8E7-
(cf, 5E6
(MO. 7E7-
E 0.5E7- 1--
a: _ 5 3E6
0.4E7 a:
O. 3E7- 2E6
0.2E7-
_ -
1E6
0.1E7-
1974 1976' 1976 1980' 1982' 1984' 1974 19(6 1978 1980 1982 1984
YEAR YEAR
0E4
0E4
0E4
I
1-Z' 0E4
0E4
-OCR
BRITISH Gm CORPORATION
— - - EL
— — -ON I
Figure 7.3.16 A Graphical Illustration of Ideal Performance
— — °CASH
-CASH
262
16000-
22500
20000 14000 /
/7
17500 ,7
tr, 12000
1..0
r-: 7
L1115000
10000-
m
cr. /
/
5: 12500 :11
l- 8000-
w If
Lc110000 Ex
cr //
a6000 --..../
7500
4000
5000
2000
2500
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976' 1973 198d 1982 1984
YEAR YEAR
3000
3500
2500
3000-
n
2500- 2000
LJJ
•
2000 w
cr
\
/ //V
n ,
(-31500
1500
,
,,
, ///' " // 1000
t \
1000 i I,,
/- 500-
500 ........„.. ___ -----
197 1974 1976 1978 1980' 1982 1984 1972 1974 1976 1978 1980 1982 1984
\ERR YEAR
263
60000-
90000-
55000
80000-
50000-
.-
Li
45000
tc̀ilL 70000-
-7:140000
cg 35000-
50000- 30000-
25000- I
40000-
20000 -
197 1974' 1976' 1978' 1980' 1982' 1972 19741 19161— 19781 1980 1982
YEAR YEAR
5000
5000
YEAR 4000-
1.93 _ 1978 19.93814___
1.1-; . I
1
1
o I
Li 1
,
z
.--. I I LcT.3000-
I 1
• _
-5000
2000-
-
-10000
1000-
-15000
-•
1972 1974 1976 1378 1980 19872r—
YEAR
-CL
—0N1
Figure 7.3.18 A Graphical Illustration of Ideal Performance
- OCASH
-CASH
264
•
5.0E5- 3.5E5
4.5E5-
3.0E5-
4.0E5-
IT 3.5E5- • -
2.5E5
w
cc 3.0E5- •
n2.0E5-
(g. 2.5E5
1.5E5
2.0E5-
1.5E5 1.0E5
1.0E5- ,
--r
1972
1974 1976 1978
0.5E5 —
1980 1982 1984 1972 194 1916' —19 (81--1 -9-807- 198i - 19E141
YEAR YEAR
50000- /
45000- /-
.../,
50000-
40000-
,-- —/
7
/ •
sz _
35000- 40000-
LL.,
30000 _./
Lt :
Li- 25000- le— ,.,- 5 in
30000-
20000-
/f\
. / \, 1
15000 //F
,
1
/
20000
.r ,
10000
/ i 10000
1
5000
1972
---- 1974 197
.—
—
.--..--/ ---,
1978 1980 1982 1984 1972 1974 1976 1978 1980' 1982 1984
YEAR YEAR
— —ON!
Figure 7.3.19 A Graphical Illustration of Ideal Performance -NI
— KASH
-CASH
265
1.2E5-
200000
175000
1.0E5- /
LU
u-' 150000
tLU 0.8E5-
In
C17.
, 125000
cr.
7:1
1
2 0 . 6E5-
S' 100000
C
(X
75000 0.4E5
50000
0.2E5-
25000
1972 1974 1976 1978 I
1980 1982 1984 1972
1 1974 1976
980' 19(8 1982' 1984'
YEAR YEAR
18000 20000-
/
16000 18000- 'I/
/
14000 / 16000-
/
/
14000- i
u., 12000-
,,,'
r"-- - -- - --'
9
c=
u N., , • - \ \ =, 12000 /
,-. 10000 - 1/ c.n i /
cc
L
-- L' 10000
/ f \
.--- ,1-
f ''''/
8000-
/I 8000
/
6000-
1 1 6000 /1 ' \\ _ _ _I
4000- 4000-
..-
-- ."
2000-
1972 1974 1978 1978 1980 1982 19841 1972 1974 1976 1978 1980
YEAR 1982 1984
YEAR
266
30000
27500 22500-
25000 20000-
(r)
LLI
in 22500
;217500-
7-n
in, 20000
cr.
1—
E, 17500
II
a 15000 c
(z
(-) 000ci
12500
10000 7500-
7500 5000-
•
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 191E1' 1980 198 2-i 1984'
YEAR YEAR
It
3500 2000-
3000
;
\ 1750- ./
I II 1500-
2500
Li.:
1250-
Li
-2000 u'
m 1
; Li
H-
LL 1000-
,/
1500 •750-
500- r
1000
250 n
500 ,
1972 1974 1976' 1978' 1980 1982' 1984' 1972- 1974 1976 1978 1980 1982 1984'
YEAR YEAR
267
225000-
200000-
1.2E5
175000-
Ln.
V! 150000-
1777.1.0E5
i
..11 . f /
`n
Ln
/
cc 125000- .C7 ,
LL.1
:721 0.8E5 /
1-. /
E=g 100000- =
u..1 ,.
E i
/
75000 0.6E5
/
50000- ...-/
r •
0.4E5
25000
972 1974 1976 1978 1988 1982 1384' 1972 1974 1976 1918 1980 1.982 1984
YEAR YEAR
40000
22500
35000-
20000
t
t
17500 1
i: 30000
C.-- i
7500 1
I
/
I 10000
1
5000- t
t j
5000
1972 1974 1976 1378 1980 1982 1984 1972' 1974 1976 1978 1988 1982 198-4T
YEAR YEAR
OEFISH
-CASH
268
35000 r\
30000'
32500
30000
tri 25000-
CO 27500
u
T25000
520000
E 22500
:D
(-) 20000 c
17500
a )5000- it \
1
, /--
\
15000 \
10000 t'
12500 ‘.*\\./-\
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976- 19(8 198-0( 1982 1984'
YEAR YEAR
r.
fl
4500- / \ 2500- ;1
' 1
/ t
4000- 2250- ._
i \
/ \ /
3500 2000- /
/ 1
L.L.;
B 3000
.
1 I .-.
E 1500
1750
/
/
/
/\
\
1
1500 -
I
i - -,
I ,,i\
% , v
',.//'-' n 500 7 \..../ .
%
• / %v
7
1972 , --- 1
. 19761- 1978
1914 1980 1982 19841 19(2 19(4 19 (6 1v9E 116R - 19801— 1982 1984
YEAR
269
/ 45000
60000-
1 40000
50000 ,3 000-
5
Ui
t; 30000
ce.1,2) 40000- Ec;
a-.
cl; 25000
..J
SLC. 30000
E
cL
20000
20000- Li 15000
/
10000 /
10000-
5000 -
1972 1974 1976 1978 1980 1982' 1984' 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
14000 7000
//I\
12000- 6000
10000 / 5000-
/ I
uJ / \
,1 r I
F--. 8000
8 ,,,, 4000. t../
in
cr.
1-- U
/ /
L-1 6000 3000
/
/
4000 / 2000.
/ ,/
,-- -} /
2000 .... ,/ 1000. /
.._ ..../ ..---
_ --------- .... .__ .- -- --' '
_ __
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1y90178R 1980
YEAR 1982 1984
PLEASURAMA PLC PL ABU CR
UCF1
• -CL
— —ON!
Figure 7.3.24 A Graphical Illustration of Ideal Performance NI
— °CASH
-CASH
270
1.4E6
9E51
1.2E6- 8E5
1.0E6
tt..;
tn
12-0.8E6
Ui
Q:.
=
(-3
0.6E6
3E5-
0.4E6-
2E5-
0.2E6-
1972 1974 1976 1978 1980 1982 19 (2 1974 1916 19(8 198d 1982
YEAR YEAR
•
60000
1
1.0E5
50000-
0.5E5-
Li 40000
Li
•-•
972 1974 1976 / 1978 IpicIU 19821
YEAR W
CC
Li
Li 30000
n
0. • .5E 5- :‘.
20000 ,-***
•-•"'
-1.0E5-
I j
10000
/
-1.5E5-
1972 1974 1976 1978 1980 1982
YEAR.
271
4
6000
(..r)
cc
5000
7:
11.1
CC:
Li 4000
-
2000
972 1974' 1976' 1978' 1980' 1982' 1984 972 1974 1976' 1918' 1980' 1982' 1984
YEAR YEAR
500
800
450-
700
400-
600 .1
,-- ; 350-
tiv....„-
w. 500
/‘; 1 300
•=•
-.400
, 1
t
1
,
u-)
cc
1I Li
250
j\
11
/ I
,
300- /
/\
/ 1
200 . ' —\ ; t I
1
if
! i
1 ; ;
100 \
272
1.1E5 80000
1.0E5
70000
0.9E5
;:60000"
"1-n
(. 0.8E5
'20.7E5
nalooT
E 0.6E5
0.5E5
30000
0.4E5
20000
0.2E5
19 ./4 1976 1918 1980
1982 1984 1914' 1916 1918 1980 1982 1984
YEAR YEAR
10000
6000
//
8000
/// 5000
./
6000
/ _4000
-
4000 3000
2000
2000
1000"
1914' 1916' 1918 19801 1982 1984 1914 1916'T 1918 1980 1982 1984
YEAR YEAR
-CL
—
Figure 7.3.27 A Graphical Illustration of Ideal Performance NI
- — — ocnsH
-CASH
273
.2.0E6- 1.4E6
. 1.8E6-
1.2E6
1.6E6- Li
172.
uJ *f_l 1.
1 . 4E6-
cc an
1.2E6- :71
Li 0.8E6 /1'
z:
Lu
1.0E6- a,
O. 8E6-1
a 0.6E6-
0.6E6- 0. 4E6
0.4E6-
1972 1974 1976 1978 1980 1982 1984 972 1974 1976 19(8 1980 1982 1984'
YEAR YEAR
5E4
1 .8E5-
0E4 1 . 6E5-
\
11
5E4 1.4E5-
I \%
Li 1. 2E5- A/
I
e2,11.0E5-
\ 5E4 0.4E5-
0.2E5
(2 1974 1976 1978 1980 1982 1984
YEAR 1972 1974 1916 1980T 1982 19841
YEAR
cn
FORD MOTOR CO. LTD. -0 CA
- - -0CL
-CL
—ON!
Figure 7.3.28 A Graphical Illustration of Ideal Performance -N1
— °CASH
-cnsn
274
• 00 0 5000
4500-
6000
4000
Ui
r: 5000 -J
3500-
Cr7
/
Cr)
E 3000-
/ /---, \s/
--J
E4000
_
2500
Li
3000 2000
1500
2000
1 00 0
1972 1974 1976' 1978' 198d 1982' 1984 1972 1974 1976 1978 1980' 1982' 1984
YEAR YEAR
800 /r 400
700-
600 /
r \ \ / 350
300
250
:..;'. 500-
Lu // f\II\ in
w
/ i E 200
I
z ,."
/
400
1 150 /
1
/
300 100
/(-----\
I. 50
200
--i
J 1 l'\\._,l
1972 1974 1976 1978 1980 1982 1984 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
—
— •—ON I
Figure 7.3.29 A Graphical Illustration of Ideal Performance -NI
- -- • - • - °CASH
-CASH
27 5
35000-
30000-
E 25000-
;FO
:c
"615000
10000
5000
9-.? 1974 197d 1978' 1980' 1982' 198'14 1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
8000
3000
7000-
2500
/-**-
6000
. ,
I
/
2000 / ' r\
A
It n / , mg.'. / --- -- / 1
Ili; 4000- t 1 1
i
I I
I
/ u 1500 /
/
I
i
s 1
I
I
/ /
7 s \
3000- 1000
/ \ t /
. r I .....\ n'. ''.
2000 //-* ..4""."-.. I li
.,,....,G, 500 1 I
I ,
,
1000.1
1972 1974 1976 1978 1980' 1982k 198:41 1972 1974 1976 1978 1980 1982 1984
YEAR Y YEAR .
276
3000-
5000
4500 2500-
3000
2500
1000
2000
500 I
1974 1976 1978 1980 1982 1984 1974 1976 198 1986 1 -9821 1984T
YEAR YEAR
450 300-
400 250 / - •
350
L.L.1
200-
E:
g. 300 a.:
1-, 150"
Ui
250
‘
tf
100
200 I \
\
150 50-
100
1974' 1976 1978 1980' 1982' 1984' 1974' 1976' 1978' 1980' 1982 1984
YEAR YEAR
-CL
— —ON I
Figure 7.3.31 A Graphical Illustration of Ideal Performance -NI
- OCRSH
-CASH
277
F-
7E5
Li
Ln
5E5
w
in _
5E5
2;
6E5-
,- 1 \
y'
m
4E5
,4E5
.,
1-.
,r t1
ill
or.
a 3E5 cc
3E5 , --- -)
1
%
2E5- t
/ i
til
1E5
1912 1974 1976' 1978 1980 1982 1984 1972 197; 1976r 19ig
F r---18811 —1982' -1984
YEAR YEAR
8E4- 80000
,
70000-
6E4-
60000-
w 4E4 7
E \ 50000
u
21:
•-• •- 340000-
n 30000-
972 1974 1976' 1978 iseo' 1982' 1921
YEAR
20000
-2E4
, 10000-
I.
-4E4 1972 1974 19761- 1978. 1980 1982 1.984
YEAR
278
9000
7000
8000
7000 En 6000
1.1/
.n LU
// f
4000 LU
3000
3000
2000-
2000
1 .
1972 1974 1976 1978 1980 1982 1984j °°°1972 1974 1976 1978 1980 1982 1984
YEAR YEAR
1000-
1200-
11
900
I 100C
800-
Llj O /iii
Goo cr,
I LU
II r
600
tj-. 500 721
279
H-
/ 45000
70000 40000
IL7.1
Ln
(efE' 50000 '&130000
cc
Li
640000 ra,
Li _
20000
30000
15000
20000
1972 1974 1976 1978 1980 1982 1984 1-9-772r 19761 — 19—?8T —190 1982 1984)
YEAR YEAR
4500-
7000
4000-
6000
3500-
5000-
...
1 3000-
4000 1 /
e i
Li
z
-------;" I
`1_:3Pc 2500 i /
— 3000
,..
, 1
1-- 1 II.
L1.1
z /
2000
.7<
\
2,3ors
1
.1 ' \
, A,
I i \.•/\
i5o0-
1000 1
,
i ...
1000
..,. ; •
,
.- \ j
,‘ . .-,
___ __ . \ ,, 1
972 1914 1976 1978 198 1982 1984 ---.._
YEAR
-1000 t f
n. 500 /
1974' 197 1976 1978 1980 1982 1984'
YEAR
-CA
BBA GROUP PLC -ocn
— -CL
— —ONI
Figure 7.3.34 A Graphical Illustration of Ideal Performance - -NI
—•— ocnsn
CASH
280
•
20000 if 18000
17500 16000
E 14000-
15000
J '11!
2112000-
ccri 12500
`j /
:110000-
10000
8000
• 7500
u 6000-
5000
4000-
2500 2000
1974 1976 1978 1980 1982 1984' 1974 1976 1S8 1980 1982 1984
YEAR YEAR
1200
3000
1000
2500
800
0 2000
1500
400
1000
II
200
500
1974 1976 1978 1980' 1982' 1984 1974 1976 1978 1980 1982 1984
YEAR YEAR
-CL
— —ON I
Figure 7.3.35 A Graphical Illustration of Ideal Performance -NI
— — — • - °CASH
- CASH
281
18000
25000
16000
22500 s's
u-)20000 14000
Ls) It
In - 12000-
cr. 17500 ER
LcS15000-
, /1 I
LLI
CY
a-.
12500- (-) 8000-
10000 6000"
7500-
4000
1972 1974 1976 197d 1980' 1982 1984 972 1974 1976 1978 1980 1982 1984
YEAR YEAR
1600
2500/1 t
1 140C
"-•••
A /
2000 ? /I 1 1200-
1000-
C) I 1 t I ,
/ = 17
1500 1 En
— I 1 A
/ 5 80C
I—
z
w/. ;
1000 1 \ 60 0
/ 7. \) k \.]
I
1
I 40C/ / // Ill
7
, t 1 ' I
500 t 1 f
t .-. !
200- z-
\./ 1
\ //'I \n
1972 1974' 1976 1978' 1980 1982 19841 1972 1974 1976 1978 1980 1982 19-8-4
YEAR YEAR
-CL
—
Figure 7.3.36 A Graphical Illustration of Ideal Performance -N1
•— — ()CASH
-CASH
282
70000-
45000-
60000- Lu
tn 4000C
3500C
/
50000
cr.
/ FE: 30000
.
(SA 40000-
c, 25000
1-0
20000 -
30000-
'
15000 ,
20000
10000
972 1974 1976 1978 1988 1982' 1984 972 1974 1976' 1978 1980 1982
YEAR 1984
YEAR
6000 8000
7000
4000
6000-
g 2000
m 500C
cn
CE
- 2000-
3000
\
2000
- 4000-
1000
1972 1974 1976 1978' 1988 1982' 1984'
YEAR
BESTOBELL PLC CA
-OCR
----
• — -CL
—0N1
Figure 7.3.37 A Graphical Illustration of Ideal Performance -NI
— OCASH
-CASH
283
8000- I 5000
, 1
4500- ,
7000 ,
, ,
LU
. , 7-\ I
4000- , \
6000 I/ \ , '-' \ ,
- \ ,I/
___/ i
cc cc 3500 \...
:71
(,, \
E 5000 I-.
Ixa-.=i 3000
_
E
Li
4000- i
/
(-) 2500- / II \ /
3000 2000 ;
1500-(
2000-
1972 1973 1974 1975 1976 1977 1978 1979 1972 1973 1974 197 1976 1977' 1978' 19791
YEAR YEAR
800
I \ 400-
1 n 350-
700 I
%
I 300-
600- I:
w
Ii
LU
500-
400 /
\
%
s,
n
In
cc
'200-
250-
150-
ln
r/
/ \\
,
\ N\
300 \ A 100
j
200- 50
1972 1973' 1974 1975 1976 197/ 1978 1979 1972 197:3 1974' 1975 1978 1977' 1978 1915
YEAR YEAR
284
1 .3E5-
1.2E5-
70000-
//
1.1E5-
\
co 1.0E5- glmooT
"n...-..• •
(1/-.)) O. 9E5-
cr. 50000 / t' / .. ... -- .. ...'- •
..J
0.8E5
Hx
cr
Li (3..7E5- gr
e 40000
Li
0.6E5-
30000-
0.5E5-
0.4E5 20000
1972 1974 1976 1978 1980' 1972 • 1974 • 1976" • 1978 • 1980'
YEAR YEAR
/N 16000
10000 I`
8000 14000-
6000 1 12000-
...:-..; ' t
w 4000 i
E.-. -,/.
2. 1 10000-
C/
L.)
2000 LT/
CC
I- - \ ' 8000-
Li
„
1972' . 1974' • 1976' • 1978' It 1980'
YEAR 1
6000-
-2000 i
/
-4000 4000- •
./
-6000 2000
• ,
1972' • 1974'. 1976 • 1978 • 1980'
YEAR
285
F-
1.6E5
90000-
1.4E5- 80000
Ui
n7000C
cr.
_ //
1— 60000
LIJ
0'.
0.6E5
30000-
1972 1974 1976 1978 1980 1972. '1974 1978 1978 1980
YEAR YEAR
20000 9000
15000 8000-
10000 I
i 7000
/ i I
t-LI 5000
c)
Li a, GOOC t
(.17 ,
r
972 1974 1976 1978 1980 1 m
YEAR I 5000 .. • i' •-. j
-5000 r
\ 4000
-10000 .... '
3000
-15000
-20000 2000
286
5000-
U7
4000-
Cr:
11nIl
2000-
1000 •
1972 1974 1976 1978 1980 1972 1974 1976 1978 ned
YEAR YEAR
450-
500
400- .,/
400-
350-
300 , • //'
300-
g.! 200/ }/ n
ic2 250
100
200-
-200- 50
• I
VINERS OCA
CA
— • ft
— ---owl
Figure 7.3.41 A Graphical Illustration of Ideal Performance -N I
-- • - NASH
287
5000 /
/ ,- , • \\
3500
4500
I \
Lu
cn 3000-
cr: 4000-
;L:
:=;
rN / , ,
1 N-- /; '
(n
u'
3500-
u 3000-
2000
ci
200
1500
2000
1972' 1974 1976' 1978' 1980 1972 1974 1976 1976 1980
YEAR YEAR
500
250
400
200
300 (
Fi
200
I OT
-10T
1972 1974 1916' 1978' 1980
YEAR
— --ON I
Figure 7.3.42 A Graphical Illustration of Ideal Performance -NI
— -- • - — acnsH
-CASH
288
12000
11000
11000
10000-
10000
9000
9000
U.J
U/ 8000
8000
7000-
L.
cL .J
a'.
7000
6000
6000
5000
5000
4000
4000
3000
3000
1972 1973 1974 1975 1976 1977 1918 1979 1972 1973 1974 1975 1976 1977 1978 1979
YEAR YEAR
800 /
600
w 400
— 200-
1
LU-
-400
289
14000
13000
7000
6500-
(\ //1/
12000 /
/ . tn
(.1-) 6000
L now , , _ ,1
u-) 1
tr) /
cc 135500
S.
10000
uJ 1—
E5000
a 9000 `x
ce
a
4500-
8000
7000 4000
1973 1974 1975 1976 1977 1978 1979 1980 1973 1974 1975 1976 197? 1978 1979 1980
YEAR YEAR
1000
700
750
/
600
500
500 ../
LL.1 250-
-500-
200-
-750-
100-
-1000-
I•
1974 1975
1973' „ 1976 19T? 1978 1979 1980
YEAR
290
•
7/- 5000"
6000 4500-
4000-
Li.t
u)
5000
E-J 3500-
cE
0
300
."
4000
2500-
6 _
(-) 2000
3000
1500-,
2000 loaf
1972 1973 1974 1975 1976 1977 1978 1979 1972 1973 1974 1975 1976 1977 1978 1979
YEAR YEAR
‘\ ------ 350-
l'
400 n
n
. \ ..._./ ; 300-
/ 1 / \
200 ,/ t
t 250-
L.).1 \ I
C) ‘
L., m
z
..... FE) 200-
I-- 1972 1973 1974 1975 1976 1977 197k 1979 L)
w YEAR
z
‘
t 150-
,
-200 t
(-\\
100- \
'-\\ \
-400 50-
t
1972' 1973 1974 1975 1976 1977 1978 1979
YEAR
—
—
Figure 7.3.45 A Graphical Illustration of Ideal Performance -NI
OCRSH
- -CASH
291
6000-
4500
5500
4000
5000
Lr) 1._- 3500
11-; I \
117, 4500 // 1 '.... \
..--". I 1
-------
/ \
FE;
nE 4000 -J 3000- ...',
1- ........... - - ...
Z
3500- Ieti 2500-
a
rx
..."/ /
3000-
2000-
2500-7
1500-
2000
1974 1976 1978' - 1980' 1974 197E 1978 1980'
YEAR YEAR
600
\
350-
400
300-
200
YERP 250-
U_1 1974, 7 1978, 1980,
CZ11
LT) 200-
=
Li
- - /
L.1-200
150
-400
100-
1
-600
50
-800
1974 1916 197E1 1980'
YEAR
292
30000 30000
25000 25000
U)
n
I-.
in
r.Fc; 20000
Vr). 20000 m
LT; I -
ai
m z:
= W15000-
u 15000 a-.
La
10000
10000
5000
1973 1974 1975 1976 1977 1978 1979 1980 1973 1974 1975 1576 1971 1978 1974 1980
YEAR YEAR
3000
1800-
2000- 1600
.:
/
1000
-
1400- /I
\,
1200- / 1 ,
,
- 1006
1974 1974 1975 1976 1977
YEAR
a:
U.) 1000
E
800
600- 1
l
1
(\
I
.A,--
,
/./
.
/
I
I
\
I
I
I
!---- I I
400 I \
I
- 2000-
200
,
1974 1974 1975 1975 19T/ 1978 1974 1.980
YEAR
293
12000 11000
10000
10000
9000
LU
8000
)j 8000
L11
7000
LU
cc - - 6000
Z
a- 6000
c LU
5000-
Li
4000-
4000
3000" ,
2000- //,
1972 1974 1976 137Ei EgeG csd {Te4 (Re6' csee' ?see'
YEAR YEAR
,
-
700 /
1000 /
• ••••"--.°
500 600
YEAR
197 13 19 1978 198
500
LU
E.
Li 500
6-.41
-
W
=--1000
-1500
-2000
-2500
29L1.
70000
40000
60000
35000-
LU
11) 50000 r- 30000-
LU
II I
cr. 'Er; -
E- 40000 cc 25000
.-J
cuj
cr. L.T., 20000
u 30000 =11."
Lj 15000-
20000
10000-
-
10000 5000
1974 1976 1978 1980 1974 1976 1978 1980
YEAR YEAR
4000 6000
2000 - YEAR
--11374--- 1976 197 19 5000-
!
! \1
-2000 4000 tI
a-:
v)
/ / I -
/.....' \ \
- 4000 LI I
\
- 6000
3000
\ \/ A
- 8000 2000- , 1
\\.."
...• .-•••
I1
/
% \
. \ t
..."
..."
-10000 \,. /
1000
,
-12000
1974 1976 1978 1980
YEAR
295
.„/•••n\
30000-
30000-
25000-
f-1-125000-
_
ES. 20000
I
1-1-;
cg 15000-
15000-
10000- ,
10000- "
•
1972' 1974' 1976' 1978 1980 1972 1974' 1976 1978'
YEAR YEAR
1400- /
YEAR
1200- IN /
197 1974 1976
1000
IT:
(ff. 800
Li
/
600
,
400 n
n
200
- -
•
1972 • 1974' 1916' • 1978' 1980
YEAR
296
8009
5000
7000 4500
4000
6000 tr)
LL.1
cri
F-
in' 5000 _
`n
cr. 3000
a-.
o--.
4000 2500
cr'
or.
2000
3000
1500-
2000
1000-
1000
• ,
1972 1974 1976 1978 1980 1972' 1974' 1976 1978' 1980'
YEAR YEAR
1400
500-
/f
YEAB..--
1200
1972, • 19- •---711376, , 1978, ., 1980,
1000-
600
- 1000-
400
- 1500-
200
—
-- —ON!
Figure 7.3.51 A Graphical Illustration of Ideal Performance -NI
-- • - ocnsH
-CASH
297
3000
3500
2150
:300O 250d
cr.
w
FE, 2250-
Ele. 2500
:5'2'2000- ,
cr.
Ci
1750-
2000
1500-
1500 1250-'7/
• 1974' 1976' 197E1 198d • 1974 1976 1978
• 1980
YEAR YEAR
250 250-
1
1974,
/I-
200 I\
-250 / I/
n
I 1, \ : t
-500 1
I
= 150 I
V)
-750 cc
U ./. i\ 1
! I \
1
-1000 I 1
1001 1
V
-1250
1 \
n
-1500 50; n
-1750
1974 1976 1978 1980
YEAR
AUSTIN (F.)(LEYTON)
—
Figure 7.3.52 A Graphical Ellustration of Ideal Performance — —ON!
-NI
OCFISH
-CASH
298
7.4 CONCLUSION
299
These equations could be also used to improve future
plans. In the Marks & Spencer case (page 240), based on its
300
CHAPTER 8
301
CHAPTER 8 : CONCLUSIONS AND RECOMMENDATIONS
as below
business.
conditions.
302
4) The techniques available in the past were wholly
percent.
performing companies.
303
6.4) Its accuracy to measure companies' financial
construction.
304
8.2 RECOMMENDATION FOR FURTHER RESEARCH: DYNAMIC ASPECT OF RATIO
depend not only on our current state but on our memory of the
improved our ability to cope with and manage time and change.
305
It would appear that fruitful research could be carried out
into how financial ratios vary over time and into the extent
involved.
306
For example, a firm's net income is usually effected by
price-level fluctuations.
management.
307
APPENDICES
308
APPENDIX 1: GEOMETRIC PRESENTATION OF THE FACTOR MODEL
Figure All
Y(Rotated factorII)
1.0
P (.19.8)
P (.2 6)
•4 (.59.4)(Centroid point)
P
3 (. P8 ' (.1)9 1)
4 ' X(Rotated
i° factor n I)
.0
are two coordinates for each point because the vector are
its coordinates:
2 2
h = +(.8) = \/.01+.64 = \/7-E- = . 806
1
2 2
h = \/(.2) +(.6) \0 .04+.36 = V770T .632
2
2 2
h = \/(.8) +(.1) \/74-T7E— = V7i3- . 806
3
2 2
h = \/(.9) +(.1) \i
v .81+.01 = V782— .906
4
2 2 2 2
h=\/a +a +a + +a
1 2 3
results.
310
The scalar product of two vectors may be defined as follows:
a
21
a
22
[a a a ...a ] x a = [c] (Al2)
11 12 13 lm 23
a
2m
311
Pair Row Column Scalar product
.61
.11
.11
.11
.11
L = a /h , L = a /h , ...,L = a /h
11 11 1 12 12 1 lm lm 1
or
a = hL ,a = hL , ....,a =hL
11 11]. 12 112 lm 1 lm
and
a = hL ,a = hL , ....,a =hL
21 221 22 122 2m 1 2m
312
representation of the scalar product of two vectors:
h L
jjl
[h L h L .... h L ] x h L = [c]
iii i i2 urn j i2
h L
jiff'
or
and
h h [L L + L L + ...+ L L ] = c (A13)
i j il jl i2 j2 im jm
for two vectors equals the cosine of the angle between the
h h cos v =c (A14)
ii ij
r /h h =a /h .a /h + a /h .a /h +...+a /h .a /h
ij i j il i jl j i2 i j2 j im i jm j
Or
r = h h cos v (A14)
ij i j ij
313
The application of the law of cosine will show that the
vectors, P1 and P2, for example the law of cosines states that
2 2 2
h h cos v = 1/2(h +h -c )
12 12 1 2
given by
2 2
c = \//(X -X ) + (Y -Y )
12 12
2 2
c = \//(.1 -.2) + (.8-.6) = \/.o1+.04 = \/7(7)3
314
Table A15 : A Centroid Factor Analysis
1 2 3 4 I II
3 .16 .22 (.65) .73 = 3 .687 .422 II -.562 -.344 .422 .484
R A
A is the transpose of A.
Figure Al2
n
Cent oid vector
315
If the X and Y coordinates for the four vectors in Fig.
Cos v =OA/OP =a /h
lc 1 1 1
a = h Cos v
1 1 lc
.37 = h (h Cos v ) = h a
c 1 lc c 1
a = .37/h
1 c
2 2
h = j(.5) + (.4) = .6403
C
a = .37/.6403 = .578
1
316
Performing this operation for the other three vectors in Fig.
R A At
1 1
R A Al
11
317
The sum of the original communality values is
318
APPENDIX 2: FACTOR ROTATION
equally well.
a a V V
11 12 11 12
a a I Cos v Sin vi V V
21 22 xi 1= 21 22
a a I-Sin v Cos vi V V
31 32 31 32
a a V V
41 42 41 42
A A V
AA= V
A as
(A 6) = V / or A IN = V/
VV I = A A A'A'
but " Ai , is
319
1 Cos v Sin vi 'Cos v -Sin v1 11 01
1 1 x 1 1 = 1 1
1-Sin v Cos 111 'Sin v Cos v1 10 11
A Ai I
The angle between the centroid axis and the Y axis in Fig.
is given by
0 ,
Hence v = 51 19 and the Sin v is .781. The angle of the
R.
320
If the signs on the loadings for factor II in Table A15 are
axes I and II yields Fig. A13. Only the end points of the
than drawing in the full vector from the origin to each data-
old Y axis. The matrix operations in Table Al2 show how this
axes, respectively.
P ( . 531 e 344 )
• 2 '
.6 .8 1.0
38-1 Lfit
P (.687,-.422)
- 3
• P4(.765,-.484)
x 321
Table A16 : Rotation of the Centroid Axis
I II I(X) II(Y)
.578 .562 1 .1 .8
.765 -.484 4 .9 .1
A A V
322
APPENDIX 3: FACTOR EXTRACTION BY THE CENTROID METHOD
factor analysis.
in such a way that one of the axes goes through the centroid
coordinate axes. Since one of the axes, say the first one,
will be
323
in
— E a ,0,0, 0 (1)
n i=1 il
be zero. In Fig. A13 there are only two factors, hence only
the new axes, the first of which goes through the centroid
starting point:
r =a +a a + +a a (2)
ij il i2 j2 im jm
E.
n n n n
r = a 1:a + a Ea + ....+ a /:: a
(3)
i=1 ij jl 1 = 1 il J2 1 = 1 12 jm i = 1 im
n n
EE
n n n
r = Ea Ea + a La + ... +
n
324
But
Z: a = a (5)
j=1 jk i=1 ik
Since both terms in Eq. (5) are merely the sum of the entries
2 n 2 n 2
r =(Z:
a ) +( a ) + E: Z.:
+( a ) (6)
j=1 1-1 ij i-1 ii i-1 i2 i=1 im
(6) are zero except the first. Eq. (6) reduces, therefore, to
n n ii 2
r a ) (7)
j=1 i=1 ij i=1
Also by Eq. (1) the sums of loadings for the second and
Cr = a a (8)
i -1 ij j1 i=1
n n
= a \ Er (9)
i = 1 ij j1 j=1 i=1 ij
r
1=1 ij
a = (10)
jl
n n
r
j=1 1=1 ij
325
Eq. (10) gives the formula for a centroid loading for
for data variable 1, for example, Eq. (10) calls for the
following steps:
sum of all entries, taking the square root, and dividing this
1 2 3 4
1 (.65) .50 .16 .17
2 .50 (.40) .22 .24
3 .16 .22 (.65) .73 T = E r = 6.56
4 .17 .24 .73 (.82)
t 1.48 1.36 1.76 1.96 \J 2.56125
a .578 .531 .687 .765
i 1/\/Y— = . 3904
326
From the correlation matrix by the operation R-AlA q , as
rows should be added also, to make sure that the row totals
1 2 3 4
1 (.316) .193 -.237 -.272
2 .193 (.118) -.145 -.166
3 -.237 -.145 (.179) .204
4 -.272 -.166 .204 (.234)
Sum .000 .000 .000 .000
0 -.316 -.118 -.178 -.234
the steps used for computing the first centroid factor to the
factor residuals.
327
First Factor Residuals after Reflecting Variable 1
1 2 3 4
1 (.316) -.193 .237 .272
2 -.193 (.118) -.145 -.166
3 .237 -.145 (.179) .204
4 .272 -.166 .204 (.234)
Sums without
communalities .316 -.504 .296 .310
1 2 3 4
1 (.316) .193 .237 .272
2 .193 (.118) .145 .166
3 .237 .145 (.179) .204
4 .272 .166 .204 (.234) T = 3.281
t 1.018 .622 .764 .877
a .562 .343 .422 .484 VT = 1.81135
1
1A117= .55207
328
COMPUTER PROGRAMS
329
COMPUTER PROGRAMS
available data.
Data
88 C2 B29
C31 C105 C114 C157 C115 C158 C49 C111 C91 C122 C43
C34 C57 C47 C48 C52 C50 C42 C123 C124 C151 C132 C106
End
Select
END
Program MISSVAL
Character 35 company
Integer date, NY
DO 10 I = 1, 23
10 KX(1) = 0
23)
DO 30 I = 1, 23
30 If (X(I).GT.9999999999.0) KX(I)=KX(I)+1
DO 40 K= 1, NY-1
330
Read (1, ) Company, date, NY, (X(I), I = 1, 23)
DO 50 I=1, 23
50 If (X(I).GT.9999999999.0) KX(I)=KX(I)+1
40 Continue
GO TO 20
STOP
END
Program ELMISVA
Dimension X(23)
Character 35 Company
Integer Date, NY
23)
DO 20 I = 1, 23
20 IF (X(I).GT.9999999999.0) GO TO 60
60 Continue
DO 40 K = 1, NY-1
DO 50 I = 1, 23
50 IF (X(I).GT.9999999999.0) GO TO 80
80 Continue
331
GO TO 30
99 STOP
END
financial data.
Program RATIOS
Character Company 35
Integer date, NY
Real Invent, NI
Rewind 1
Rewind 2
Rewind 3
Rewind 4
Rewind 5
Rewind 6
Rewind 7
Rewind 8
Rewind 9
Rewind 10
Rewind 11
Rewind 12
Rewind 13
Rewind 14
Rewind 15
Rewind 16
Rewind 17
332
10 Read (1, 200, END =99) Company, date, NY, Sales,
Invent, CA, CL, TA, TL, RE, Cash, FA, PS, NI, PBT,
TI, PD, CD, Depre, El, TT, OC, DC, Credits, SF,
Debts
R1 - NI/TA
R2 = NI/SF
R3 = NI/CA
R4 = NI/(TA-SF)
R5 = NI/SALES
R6 = NI/FA
R7 = (PBT+TI)/TA
R8 - (PBT+TI)/SALES
R9 = (PBT+TI)/SF
R10 = (PBT+DEPRE)/SF
R11 = SALES/TA
R12 = SALES/SF
R13 = SALES/CA
R14 - SALES/(TA-SF)
R15 = NI/(TA-CL)
R16 = (PD+CD)/(NI+DEPRE+EI)
R17 = (DEPRE+TI+TT)/(PS+0C+DC)
R18 = TI/SF
R19 = TI/(PBT+TI)
R20 = CD/NI
R21 = CA/CL
R22 = CL/SF
R23 = (CA-CL)/TA
R24 = CA/TA
R25 = CA/SALES
333
R26 = CA/SF
R27 = (CA-CL)/FA
R28 = (CA-CL)/SALES
R29 = (CA-INVENT)/CL
R30 = (CA-INVENT)/SALES
R31 = (CA-INVENT)/TA
R32 = (RE+DEPRE+EI)/(TA-CL)
R33 = DEBTS/SF
R34 = CASH/TA
R35 = CASH/SALES
R36 = CASH/CL
R37 = CREDITS/SF
R38 = TL/SF
R39 = SF/FA
R40 = (NI+DEPRE+EI)/(TA-SF)
R41 = (NI+DEPRE+EI)/CL
R42 = (NI+DEPRE+EI)/SALES
R43 = (NI+DEPRE+EI)/SF
R44 = (NI+DEPRE+EI)/TA
R45 = INVENT/SALES
R46 = INVENT/CA
R47 = INVENT/TA
R48 = INVENT/CL
R49 = INVENT/(TA-CL)
R50 = CL/CA
R51 = CL/TA
R52 = TL/CA
R53 = RE/SF
R54 = (CA-CL)/SF
334
R55 0 RE/TA
R56 0 CASH/CA
R57 0 SF/TA
R58 0 FA/SF
R59 = FA/TA
R60 = RE/NI
R61 (TL+PS)/TA
R62 = SF/(TA-SF)
R63 = CL/(TA-SF)
R64 = FA/(TA-CL)
R65 = OC/SF
IF (DATE.EQ.1971) IC = 1
IF (DATE.EQ.1972) IC = 2
IF (DATE.EQ.1973) IC = 3
IF (DATE.EQ.1974) IC = 4
IF (DATE.EQ.1975) IC = 5
IF (DATE.EQ.1976) IC = 6
IF (DATE.EQ.1977) IC = 7
IF (DATE.EQ.1978) IC = 8
IF (DATE.EQ.1979) IC = 9
IF (DATE.EQ.1980) IC = 10
IF (DATE.EQ.1981) IC = 11
IF (DATE.EQ.1982) IC = 12
IF (DATE.EQ.1983) IC = 13
IF (DATE.EQ.1984) IC = 14
IF (DATE.EQ.1985) IC = 15
R9 R10 R11 R12 R13 R14 R15 R16 R17 R18 R19 R20 R21
R22 R23 R24 R25 R26 R27 R28 R29 R30 R31 R32 R33 R34
335
R35 R36 R37 R38 R39 R40 R41 R42 R43 R44 R45 R46 R47
R48 R49 R50 R51 R52 R53 R54 R55 R56 R57 R58 R59 R60
N = NY
DO 20 I = 1, N-1
Invent, CA, CL, TA, TL, RE, Cash, FA, PS, NI, PBT,
TI, PD, CD, Depre, El, TT, OC, DC, Credits, SF,
Debts
R1 = NI/TA
R2 = NI/SF
R3 = NI/CA
R4 = NI/(TA-SF)
R5 = NI/SALES
R6 = NI/FA
R7 = (PBT+TI)/TA
R8 = (PBT+TI)/SALES
R9 = (PBT+TI)/SF
R10 = (PBT+DEPRE)/SF
Rll = SALES/TA
R12 = SALES/SF
R13 = SALES/CA
R14 = SALES/(TA-SF)
R15 = NIRTA-CL)
R16 = (PD+CD)/(NI+DEPRE+EI)
R17 = (DEPRE+TI+TT)/(PS+0C+DC)
R18 = TI/SF
R19 = TI/(PBT+TI)
R20 = CD/NI
336
R21 = CA/CL
R22 = CL/SF
R23 = (CA-CL)/TA
R24 = CA/TA
R25 = CA/SALES
R26 = CA/SF
R27 = (CA-CL)/FA
R28 = (CA-CL)/SALES
R29 = (CA-INVENT)/CL
R30 = (CA-INVENT)/SALES
R31 = (CA-INVENT)/TA
R32 = (RE+DEPRE+EI)/(TA-CL)
R33 = DEBTS/SF
R34 = CASH/TA
R35 = CASH/SALES
R36 = CASH/CL
R37 = CREDITS/SF
R38 = TL/SF
R39 = SF/FA
R40 = (NI+DEPRE+EI)/(TA-SF)
R41 = (NI+DEPRE+EI)/CL
R42 = (NI+DEPRE+EI)/SALES
R43 = (NI+DEPRE+EI)/SF
R44 = (NI+DEPRE+EI)/TA
R45 = INVENT/SALES
R46 = INVENT/CA
R47 = INVENT/TA
R48 = INVENT/CL
R49 = INVENT/(TA-CL)
337
R50 = CL/CA
R52 = TL/CA
R53 = RE/SF
R54 = (CA-CL)/SF
R55 = RE/TA
R56 = CASH/CA
R57 = SF/TA
R58 = FA/SF
R59 = FA/TA
R60 = RE/NI
R61 = (TL+PS)/TA
R62 = SF/(TA-SF)
R63 = CL/(TA-SF)
R64 = FA/(TA-CL)
R65 = OC/SF
IF (DATE.EQ.1971) IC = 1
IF (DATE.EQ.1972) IC = 2
IF (DATE.EQ.1973) IC = 3
IF (DATE.EQ.1974) IC = 4
IF (DATE.EQ.1975) IC = 5
IF (DATE.EQ.1976) IC = 6
IF (DATE.EQ.1977) IC = 7
IF (DATE.EQ.1978) IC = 8
IF (DATE.EQ.1979) IC = 9
IF (DATE.EQ.1980) IC = 10
IF (DATE.EQ.1981) IC = 11
IF (DATE.EQ.1982) IC = 12
IF (DATE.EQ.1983) IC = 13
338
IF (DATE.EQ.1984) IC = 14
IF (DATE.EQ.1985) IC = 15
R9 R10 R11 R12 R13 R14 R15 R16 R17 R18 R19 R20 R21
R22 R23 R24 R25 R26 R27 R28 R29 R30 R31 R32 R33 R34
R35 R36 R37 R38 R39 R40 R41 R42 R43 R44 R45 R46 R47
R48 R49 R50 R51 R52 R53 R54 R55 R56 R57 R58 R59 R60
GO TO 10
99 STOP
END
2 R1 TO R8 1-80/
3 R9 TO R16 1-80/
10 R65 1-10
N OF CASES UNKNOWN
339
FACTOR VARIABLES=R1 TO R65
OPTIONS 7,10,11
STATISTICS 1,2,4,5,6,7
TITLE COMPANL
YEAR 13-16/
2 R1 TO R8 1-80/
3 R9 TO R10 1-20
4.81R10 - 1.989
EXECUTE
FINISH
by company.
program recode
integer year, c
c= 0
340
If (compl.NE.comp) then
compl = comp
c = c+1
end if
Go to 5
close (4)
stop
end
Y 16-23, C 24-27
SORT CASES BY C
SPLIT FILE BY C
/VERTICAL =
/HORIZONTAL = YEAR
EXECUTE
FINISH
PROGRAM PLOT14
341
DIMENSION XARR(14), YlARR(14), Y2ARR(14), Y3ARR(14),
Y8ARR(14)
REWIND 1
OPEN (UNIT=1,FILE='KOBRA')
I = 1, 14)
342
CALL SET KY ('L', 'R', 8, 6)
CALL ENDPLT
STOP
END
343
LIST OF REFERENCES
344
LIST OF REFERENCES
550-612.
134.
345
9) Archer S. H. (1966) "A Model for the Determination of
Wales, London
33-45.
vol 38 pp 337-344.
346
15, pp 1-16.
Selected Studies.
pp 70-112
vol 31 pp 505-535.
Bradford.
672.
Success"
347
of Bradford
Columbus, 0. USA.
2 pp 98-121.
Management" Cambridge
348
15-18.
London.
349
Analysis" Dun & Bradstreet Ltd. New York.
45) Dun & Bradstreet (1973) "The Failure Records" Dun and
Wiley.
632.
Bradford, UK.
350
Industry" Pruett Press.
Analysis" Mc Graw-Hill.
351
Association vol 60 226-256.
of Management
352
16 February.
pp 30-48.
308.
353
295.
448
354
Computers to Factor Analysis", Educational and
Vol 27 pp 1057-1071.
424.
355
42.
pp 149-151.
A 67 pp 256-264.
London.
USA.
vol 8, pp 285-300
Vol 18 pp 292-310.
356
105) Litzenberger R. H.& Joy O. M. (1971) "Target Rates
University of Bradford.
357
on Financial Ratios" Journal of Accountancy Vol 116,
pp 49-58.
pp 510-530
2.
358
122) Radnor M., Rubenstein A. H. and Ben A. S. (1968)
Quarterly Vol 19
Plymouth UK.
359
131) Schilderick J. H. F. (1977), "Regression and Factor
57, pp 127-153.
277-293.
J. Butland, UK
Press.
University
360
140) Smith K. V. (1971) "Portfolio Management:
Inc.
361
York, London.
Nov-Dec pp 48-53.
362
158) Weston J. F.and Brigham E. F.(1975), "Managerial
Illinois.
pp 152-160.
634.
Wood, London.
edition McGraw-Hill.
363