FINANCIAL INDICATORS AND KEY RATIOS

Transcription

1 1 (5) FINANCIAL INDICATORS AND KEY RATIOS In the notes to the accounts, the investment firm must give the financial ratios and other indicators describing corporate financial performance and share performance over the last five financial years or, if the investment firm has not operated for five financial years yet, for the entire period it has been in operation. The principles applied in calculating indicators and ratios should appear in the annual accounts. If the investment firm is required to draw up consolidated accounts, the indicators should apply to the consolidated figures. All investment firms must report indicators of their financial performance. Investment firms whose shares are subject to public trading should also report the share performance indicators. Figures in Finnish markkas should be given in millions of markkas and percentages to one significant place after the decimal. The share-issue adjustments required for reporting the share performance indicators shall be calculated according to the general guideline of the Accounting Board on the drawing up of the annual accounts, account statements and interim statements referred to in the Decision of the Ministry of Finance (14 June 1995/879). I Key financial indicators The following key financial indicators should be shown: 1) Net turnover This figure refers to the profit and loss account item Net income from investment services. 2) Net operating profit or loss, as a percentage of net turnover Net operating profit or loss refers to the corresponding item in the profit and loss account. 3) Profit or loss before appropriations and taxes, as a percentage of net turnover This figure refers to the corresponding item in the profit and loss account.

2 2 (5) 4) Return on equity Return on equity, % = Net operating profit / loss - taxes Equity capital + minority interest + voluntary provisions + depreciation difference less deferred taxes due (average of the figures for the beginning and the end of the year) Taxes refer to direct income and wealth taxes. In accordance with the corporate tax credit system, income tax may also be determined on the basis of dividends. In that case, supplementary tax should also be taken into account in calculating the amount of taxes in the financial indicators. Taxes for previous financial years should also be included. The share of taxes on extraordinary items should not be taken into account. Taxes must be taken into account regardless of how they are entered in the books (even taxes that have only been treated in the balance sheet should be taken into account). The change in deferred taxes due must also be included in taxes. Deferred taxes due are calculated according to the tax rate applied on the date the annual accounts are drawn up. The change in deferred taxes due as well as the deferred taxes due included in the voluntary provisions and depreciation difference in the divisor of a financial ratio need not be deducted if it is not considered probable that the deferred taxes due will realize during the next three years following the date the annual accounts are drawn up. It must always be specified in connection with the financial ratio whether deferred taxes due have been deducted. If the deferred taxes due have not been deducted, the reasons for which the realization of the deferred taxes due is not considered probable must be stated in the basis for the calculation. When calculating financial ratios, compulsory provisions, due to their financial implications, are considered as liabilities. 5) Return on assets Return on assets, % = Net operating profit/loss - taxes Average balance sheet total (average of the figures for the beginning and the end of the year)

3 3 (5) 6) Equity-to-assets Equity / total assets ratio, % = Equity capital + minority interest + voluntary provisions + depreciation difference less deferred taxes due Balance sheet total Imputed taxes due are taken into account in the manner described in item 4) above. 7) Earnings to operating costs Earnings/operating costs = Net income from investment services commission expenses + interest expenses + administrative expenses + depreciation + other operating expenses II Share performance indicators Show the following indicators separately for each class of shares: 1) Earnings per share Earnings per share = Net operating profit or loss ± minority interest in the profit or loss for the financial year - taxes Adjusted average number of shares during the financial year Taxes are calculated as described in paragraph I, item 4) above. If the length of a financial year is other than 12 months, the profit or loss for the financial year should be adjusted to correspond to 12 months. The different length of the financial year shall be indicated in connection with the share performance indicators. If the investment firm has issued convertible bonds or bonds with equity warrants, and their impact on earnings per share is material, the indicator must also be shown adjusted by the dilution factor, unless the adjusted ratio is higher than the undiluted ratio. In time series, only the last year s ratio need be adjusted. In the case of convertible bonds, the dilution factor is taken into account in the number of shares as if all the conversions had taken place at the beginning of the

4 4 (5) financial year, or, in the case of the year the convertible bonds were issued, on the date of issue. Correspondingly, if the interest expenses on convertible bonds concerned are material, taking into account their effect on taxes, they should be included in earnings. In the case of bonds with equity warrants, the dilution factor is taken into consideration in the number of shares as if all the new shares the warrants entitled to had been subscribed at the beginning of the financial year, or, in the case of the year the bonds with equity warrants were issued, on the date of issue. Correspondingly, imputed interest income on capital that would have resulted from subscriptions should be calculated at market value and included in earnings (taking into account its effect on taxes). 2) Equity per share Equity per share = Equity capital + voluntary provisions + depreciation difference at year end less deferred taxes due and minority interest Adjusted average number of shares on balance sheet date Imputed taxes due are taken into account in the manner described in paragraph I, item 4) above. 3) Dividend per share Dividend per share = Dividend paid for the financial year Adjusted average number of shares on balance sheet date 4) Dividend payout Dividend payout, % = Dividend paid for the financial year Net operating profit

5 5 (5) 5) Effective dividend yield Effective dividend yield, % = Dividend per share Adjusted closing price for the financial year Closing price is the price paid for the last round lot traded during an ordinary trading session. 6) Price to earnings Price/earnings, % = Adjusted closing price for the financial year Earnings per share 7) Share price performance For each financial year, show the adjusted lowest and highest price paid in public trading as well as the adjusted average price during the financial year. The average price is calculated by dividing total share turnover in markka terms by the number of shares traded during the financial year. In addition, movements in the average share price should shown as a chart based on at least monthly quotations. An index series may be used as a chart. 8) Market capitalization Market capitalization = Total number of shares x closing price for the financial year 9) Trading volume Give the total number of shares traded during the financial year and share turnover as a percentage, ie, the number of shares traded during the period divided by the average number of shares for the series during the financial year. 10) Weighted average of the adjusted total number of shares during the financial year 11) Adjusted number of shares at year s end