CASH VALUE ADDED (CVA® ) METHOD IN MEASURING FINANCIAL PERFORMANCE AND AN APPLICATION TO BORSA ISTANBUL LISTED FIRMS
Öz
Firm value maximization objective requires evaluating the financial
performance of firm correctly and explicitly. Traditional performance measurement
methods like profitability and efficiency measure the performance only in one dimension
and do not take value maximization into account. Recent developments in money and
capital markets offer opportunities to potential investors in terms of new choices.
Investors may decide and move on alternatives faster than before. Thus, corporate
managers compete with each other to find resources with appropriate costs. In order to
capture attention for competition is also important to focus on value creation besides
profitability that induces firm value maximization. Besides the profit and profitability
issues, another important topic is value creation for firms. In addition to traditional
measurement and evaluation methods, new evaluation and measurement methods should
be applied. Value based performance measurement methods are used for determination of
the value added by firm and of the added value’s effect on shareholder expectations.
Value based performance measurement and evaluation methods do not deny the previous
traditional methods, nevertheless may consider as a reasonable complementary
perspective that focus on not merely on profits but regarding the firm performance with a
holistic approach. Cash Value Added method (CVA®
) which is also a value based
performance measurement method that takes only liquid and cash related issues into
account. Whilst finance literature review, we realized that CVA did not attract
researcher’s interest comparing to other methodologies relying on rare studies.
In this paper, we gauged 10 randomly selected BIST(Borsa İstanbul-Istanbul
Stock Exchange) listed firm’s data between 2009 and 2012 by using BCG developed
CVAs. These firms are; Ak-Al Gayrimenkul Gel. ve Tekstil San. A.Ş., BAGFAŞ
Bandırma Gübre Fab. A.Ş., Kartonsan Karton San. ve Tic. A.Ş., Netaş Telekomünikasyon
A.Ş., Türkiye Şişe ve Cam Fab. A.Ş., TAT Konserve Sanayi A.Ş., Türk Demir Döküm
Fabrikaları A.Ş., Ünye Çimento Sanayi ve Ticaret A.Ş., Yataş Yatak ve Yorgan San ve
Tic. A.Ş. ve Yünsa Yünlü Sanayi ve Ticaret A.Ş.
These firm’s CVA values are determined not only with scores, also we detailed
the calculation steps and financial performance changes in the period. We used 942 daily
data between 2009 and 2012 (2009: 252 days, 2010: 249 days, 2011: 252 days, 2012: 189
days) For 2012 data, we could only able to use 189 days (3rd quarter) because last period
was not publicly available, thus we also used 2011’s 3rd quarter data placed for
comparison. Intense investigation process and data manipulations and calculations forced
us limit the periods with 4 and sample size with 10. We calculated CVA values of the
firms by BCG suggested method. Corporation income tax assumed 20% and unchanged
in the period. We used Microsoft Office Excel for calculations.First, for determination of Operation Cash Flow Demand (OCFD) cost, we
gauged the leverage ratios which allows us to observe external financial resources and
owner’s equity applied. For assessing external resources costs, we addressed annual
average of commercial banks borrowing interest rates in 2009-2012 (9 months) period.
We used CAPM (Capital Asset Pricing Model)to calculate owner’s equity costs. Betas (β)
are determined as follows;
( )
( , )
m
i m
i
Var r
Cov r r
(i)
where, Cov(ri
,rm)= Covariance of i asset with market portfolio, Var(rm)= Variance of the
market portfolio
2009-2012 ( 9 months) period, risk free rate is one year treasury bills average rate. Annual
average returns for 2009 is 11.6%, 2010 is 8.50%, 2011 is 8.7% and 2011 is 8.8%. CAPM
is used for owner’s equity cost calculations which computed as follows;
(ii)
where, = risk free rate, = regression coefficient, = expected return on
market portfolio
Weighted Average Cost of Capital (WACC) , gauged with cost of debt and cost of
common stock computed as follows;
(iii)
where, = weight of debt in capital structure, = cost of debt, = weight of
equity in capital structure, = cost of equity
After calculations above, we calculated OFCD values. The difference between cash based
Net Operating Profit after Taxes (NOPAT) values and cash based cost of capital values is
CVA value.
We used publicly available balance sheets, income sheets, cash flow sheets and foot notes
of the firms which listed in BIST-Industry Index(ISE-Istanbul Stock Exchange) in 2009-
2012 (9 months) periods. For this reason, this might seem to be a problem but fixed. For
adjustment in 2012 data which is for 9 months, we used 2011 (9 month) data. For
instance, the change in long term external resources, 2011 and 2012 balance sheet values
for consistency.
When results are evaluated, 6 firms (BAGFS, KARTNS, NETAS, TUDDF, YATAS,
YUNSA) cannot created a cash value added so the shareholder value in 2009. Similarly, 4
firms (AKALT, NETAS, TUDDF ve YUNSA) in 2010, 3 firms (AKALT, TUDDF ve
YATAS) and in 2012 (9 months) 7 firms (AKALT, NETAS, SISEC, TATKO, TUDDF,
YATAS ve YUNSA) did not create cash value added which appears like no addition to
shareholder value. OCFD that represents equity invested is higher than OCF which represents cash flow and
NOPAT. Many firms performed well in most periods in terms of OFC however, that
increase which is more than OCFD resulted with negative CVA values naturally. These
results can be interpreted as a stray from strategic investments and/or too much cash
invested that its cash flow provided. Saying in another words, these firms employed
excess capital investments which cannot be satisfy with cash flows.
In the investigated periods, WACC values are relatively but substantially less, comparing
to the previous periods. External debt costs and equity costs are relatively low in those
periods. For this reason, cost of capital prevailed positively and it is highly probable that
reason encouraged the firms on new high investments. As mostly industrial firms, an
intense increase in investments can be explained via this factor. Even though interpreted
positively, negative cash value added values reflects that investor value creation is not
considered whilst investment planning and application process. Negatively resulted
periods can be interpreted as an important clue that investments made were not strategic.
In Finance literature in Turkish, value based measurement methods applied in large
quantities though very rare with CVA method. Instead of comparing methods within, like
most pioneer studies, we preferred to describe, demonstrate the process of CVA and detail
calculations. Further studies should use bigger dataset with longer periods and bigger
sample size apparently and comparison of methods can be useful.
Anahtar Kelimeler
FİNANSAL PERFORMANSIN ÖLÇÜMÜNDE NAKİT KATMA DEĞER YÖNTEMİ (CVA®) VE BORSA İSTANBUL’A KOTE ŞİRKETLERDE BİR UYGULAMA
Öz
Bu çalışmada, hisse senetleri Borsa İstanbul’da işlem gören şirketlerden tesadüfî olarak seçilen 10 sanayi endeksinde yer alan (AKALT, BAGFS, KARTNS, NETAS, SISEC, TATKO, TUDDF, UNYEC, YATAS, YUNSA) şirketlerin 2009-2012 yılları arasında bilanço, gelir tablosu ve nakit akım tablosu dipnot ve eklerinden elde edilen verilerle, finans literatüründe pek sıklıkla kullanılmamış olan, BCG tarafından geliştirilmiş CVA® (Cash Value Added) yöntemi ile finansal performanslar incelenmiştir. Az kullanılmış olması geleneksel performans ölçüm yöntemleriyle çelişkili olduğunu göstermemektedir, hatta belki de geleneksel yöntemlerin doğrulayıcısıdır. Bu nadir kullanım sebebiyle farklı işletmelerin CVA® değeri hesaplanması, hesaplama adımları ile ortaya konulmuş ve yıllar içinde nakit katma değer yaratma bakımından finansal performanslarında yaşanan değişimler belirlenmiştir. Araştırma bulgularında, Nakit akış talebi (OCFD-Operation Cash Flow Demand) olarak ifade edilen yatırılan sermaye, nakit akışı (OCF-Operation Cash Flow) olarak ifade edilen nakit esaslı NOPAT (Net Operating Profit After Tax) değerinden yüksek olduğu tespit edilmiştir. Ayrıca, işletmelerin ağırlıklı ortalama sermaye maliyetlerinin (AOSM) diğer önceki yıllara göre göreceli olarak oldukça düşük olduğu belirlenmiştir.
Anahtar Kelimeler
