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CASE: REESE CAMPBELL CASE SCENARIO (31)
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CASE: Using EVA and MVA at OUTSOURCE, INc. (27)
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Utilizando EVA y MVA en OUTSOURCE, INc.
“Últimamente escuché mucho sobre algo llamado MVA, que significa Valor Agregado de Mercado, y tenía curiosidad de saber si es algo que podamos usar en OSI”. Este fue el comentario de Keith Martin cuando terminó de comer su almuerzo. Keith es presidente y CEO de OutSource, lnc. Su invitado para el almuerzo ese día fue un analista de la industria informática de una firma de corretaje local. Keith lo invitó a almorzar para obtener más información sobre MVA y sus usos.
“Sí”, respondió el analista, “He escuchado muchas cosas sobre el MVA. Se basa en el Valor Económico Agregado, o EVA, que es un enfoque de ingreso residual en el que se compara la ganancia operativa neta de una empresa después de impuestos, llamada NOPAT”. un nivel mínimo de rendimiento que una empresa debe obtener sobre la cantidad total de capital puesto a su disposición “.
“¿Has visto el número más reciente de Fortune?” continuó, mientras le entregaba una copia de la publicación a Keith. ” Tiene un artículo [1] en el que actualiza la lista de Stem Stewart de las 1,000 empresas mejor calificadas por MVA. También te interesará un artículo anterior de Fortune [2] sobre EVA; sin embargo, no se deje engañar por la simplicidad de los cálculos de EVA en ese artículo. El beneficio operativo después de impuestos, NOPAT, y el monto utilizado para capital no se deducen directamente de los estados financieros. Debe analizar las notas a pie de página para determinar los ajustes que se deben hacer para llegar a esas cantidades; Bennett Stewart los llama equivalentes de capital “.
“Esos artículos suenan como una lectura muy interesante para mí en el momento en que me ocupo de este tema”, dijo Keith. “¿Puedes enviarme una copia del artículo anterior también?”
“Sí, lo haré”, dijo el analista. “Pero dime, ¿qué es lo que tiene MVA y EVA que despertó tu interés en probarlos en OSI?”
“Al rastrear nuestra industria”, respondió Keith, “veo que los precios de las acciones de algunos de nuestros competidores clave, como Equifax, aumentan. Sin embargo, cuando comparo el reciente crecimiento de OSI en ventas y ganancias, nuestro rendimiento de capital y ganancias por acción se compara bueno, pero el precio de nuestras acciones no alcanza casi la misma tasa de aumento, y no entiendo por qué “.
El analista dijo que “algunas de esas empresas podrían beneficiarse del uso de EVA, y el valor de mercado de sus acciones probablemente refleja los resultados de sus esfuerzos. Se ha demostrado que existe un mayor nivel de correlación entre EVA y el valor de mercado de una acción que se ha encontrado con las medidas tradicionales de rendimiento contable, como ROE o EPS “.
“Pero la clasificación de 1,000 MVA probablemente solo incluya grandes firmas”, observó Keith después de revisar el artículo que el analista le había dado. “¿Funcionará EVA en una pequeña empresa de servicios como OSI?”
“La mayoría de las firmas más grandes de los EE. UU. Están en el ranking Stem Stewart MVA”, dijo el analista, “pero he leído que EVA está siendo usado en firmas más pequeñas. Y algunas firmas en el ranking son firmas de servicios, como AT&T, McDonald’s, “Marriott International, y Dun & Bradstreet no soy un experto en MVA o EVA, pero no veo ninguna razón por la que no funcione en OSI”.
“Me gustaría saber más en detalle sobre MVA y EVA y cómo podemos usarlo en OSI. Por ejemplo, hemos hablado sobre un nuevo plan de incentivos; ¿funcionará en esa área? Y, de ser así, lo hará. ¿Nos ayuda a decidir cómo debemos organizar y administrar nuestras operaciones a medida que nos expandimos y crezcamos en el futuro? ¿Qué puede hacer para obtener más información sobre estas cosas para mí bastante pronto? “
“Una aplicación por la que se promociona EVA es su uso en planes de incentivos”, respondió el analista. “Tengo un equipo de estudiantes de MBA de Wake Forest que me asignaron este otoño para hacer un proyecto relacionado con la industria y estaba buscando algo ‘sustancioso’ para que ellos hicieran. Esto parece ser el boleto. Les daré información sobre ellos. y pídales que vengan para obtener la información necesaria y entrevistarle “.
“¡Genial! Espero conocerlos”, dijo Keith. “Y, en ese caso, el almuerzo es para mí”, mientras buscaba el cheque.
Información de la empresa
OutSource, Inc. (OSI) is a computer service bureau that provides basic data processing and general business support services to a number of business firms, including several large firms in their immediate local area. lts offices are in a large city in the mid-Atlantic region, and it serves client firms in several mid-Atlantic states. OSI’s revenues have grown fairly rapidly in recent years as businesses have downsized and outsourced many of their basic support services.
The Corplnfo Data Service (CIDS) classifies OSI as an information services firm (SIC 7374). This group is composed, in large part, of smaller, independent entrepreneurs that provide a variety of often disparate services to both corporate and government clients. Market analysts feel a continuously healthy economy translates into strong potential for higher earnings by members of this group. A factor sustaining an extended period of growth is the increased attention of firms to control costs and to outsource their noncore functions, such as personnel placement, payroll, human resources, insurance, and data processing. This trend is expected to continue, probably at an increasing rate, through to the end of the decade. Several firms in this industry have capitalized on their growth and geographic expansion to win lucrative contracts with large clients that previously had been awarded on a market-by-market basis.
Although OSI operates out of its own facilities, which include some computing equipment and furniture, the bulk of its computer processing power is obtained from excess computer capacity in the local area, primarily rented time during third-shift operations at a large local bank. However, to be successful in the long-term, OSI management knows it must expand its business considerably, and, to ensure it has full control over its operations, it must set up its own large-scale computing facility in-house. These items are included in OSI’s long-range strategic plan.
As OSI’s reputation for accurate, reliable, quick response service has spread, the firm has found new business coming its way in a variety of data processing and support services. The issue has been deciding which services to take on or to stay out of in light of the current limitations on OSI’s computing resources and to ensure that they can continue to provide high-quality service to customers. Things are definitely looking up for OSI, and industry market analysts have recently begun to look more favorably on their stock.
In 1993, OSI’s board decided to pursue additional opportunities in payroll processing and tax filing services, and OSI purchased a medium-sized firm that had an established market providing payroll calculating, processing, and reporting services for several Fortune 500 firms on the East Coast. OSI is now in the midst of developing a new payroll processing system, called PayNet, to replace the outmoded system that was originally created by the firm it acquired.
Once PayNet is developed, it will give users an integrated payroll solution with a simple, familiar graphical user interface. From an administrative perspective, it will allow OSI to reduce its manual data entry personnel, speed data compilation and analysis, and simplify administrative tasks and the updating of customer files for adds, moves, and changes. PayNet will serve as the backbone for OSI’s service bureau payroll processing operations in the future; however, developmental and programming costs are proving to be higher than expected and will delay the roll-out of the final version of the new payroll engine. Beta testing of the production version of PayNet is being delayed from the second to the third quarter.
Additional Accounting lnformation
OSI’s financial statements for 1995 appear in Exhibit 1. The following is a list of information pertinent to calculating a firm’s EVA extracted from the footnotes to OSI’s financial statements for 1995.
- Inventories are stated principally at cost (last-in, first-out), which is not in excess of market Replacement cost would be $2,796 greater than in 1994 and $3,613 greater than in 1995.
- Deferred tax expense results from timing differences in recognizing revenue and expense for tax and reporting purposes.
- On July 1, 1993, the Company acquired CompuPay, a payroll processing and reporting service firm. The acquisition was accounted for as a purchase, and the excess of cost over the fair value of net assets acquired was $109,200, which is being amortized on a straight-line basis over 12 years. One-half year of goodwill amortization was recorded in 1993.
- Research and development costs related to software development are expensed as incurred. Software development costs are capitalized from the point in time when the technological feasibility of a piece of software has been determined until it is ready to be put on line to process customer data. The cost of purchased software, which is ready for service, is capitalized on acquisition. Software development costs and purchased software costs are amortized using the straight-line method over periods ranging from three to seven years. A history of the accounting treatment of software development costs and purchased software costs follows:
| EXPENSED | CAPITALIZED | AMORTIZED | |
| 1993 | $166,430 | $9,585 | 0 |
| 1994 | $211,852 | $5,362 | $4,511 |
| 1995 | 89,089 | 18,813 | 5,111 |
| $467,371 | $33,760 | $9,622 |
| EXHIBIT 1 OSI 1995 Financial Statements | ||
| OUTSOURCE,INC. BALANCE SHEET (DECEMBER 31) | ||
| ASSETS | 1995 | 1994 |
| Current Assets | $144,724 | $169,838 |
| Cash | 217,085 | 192,645 |
| Trade and other receivables (net) | 15,829 | 23,750 |
| Inventaries | 61,047 | 49,239 |
| Other | $438,685 | $435,472 |
| Total current assets | ||
| Noncurrent Assets | $123,135 | $109,600 |
| Property, plant, and equipment | 33,760 | 14,947 |
| Software and development costs | 151,357 | 141,892 |
| Data processing equipment and furniture | 3,650 | 8,844 |
| Other noncurrent assets | $311,902 | $275,283 |
| Less: Accumulated depreciation | 85,018 | 57,929 |
| Total noncurrent assets | $226,884 | $217,354 |
| Goodwill | 88,200 | 96,600 |
| Total assets | $753,769 | $749,426 |
| Liabilities and Shareholders’ Equity | ||
| Current Liabilities | ||
| Short-term debt + current portian oflong-term note | $27,300 | $31,438 |
| Accounts payable | 67,085 | 57,483 |
| Deferred income | 45,050 | 32,250 |
| lncome taxes payable | 19,936 | 12,100 |
| Employee compensation and benefits payable | 30,155 | 28,950 |
| Other accrued expenses | 28,458 | 27,553 |
| Other current liabilities | 17,192 | 29,769 |
| Total current liabilities | $235,176 | $219,543 |
| Long-term debt less current portian | 98,744 | 117,155 |
| Deferred income taxes | 6,784 | 4,850 |
| Shareholders’ Equity | ||
| Cumulative nonconvertible preferred stock, $100 par value, | ||
| authorized 5,000 shares, issued and outstanding 1,000 shares | 100,000 | 100,000 |
| Common stock, $1 par value; 300,000 shares authorized; | ||
| 219,884 shares issued and outstanding | 219,884 | 219,884 |
| Additional paid-in capital | 32,056 | 32,056 |
| Retained earnings | 61,125 | 55,938 |
| Total shareholders’ equity | 413,065 | $407,878 |
| Totalliabilities and shareholders equity | $753,769 | $749,426 |
| 1995 | |
| Statement of lncome for Year Ended December 31, 1995 | |
| Operating revenue | $2,604,530 |
| Less: Costs of services | 1,466,350 |
| Gross profit | $1,138,180 |
| Less: Operating expenses | |
| Selling, general and administrative | 902,388 |
| Research and development | 89,089 |
| Other expense (income) | 59,288 |
| Write-off of goodwill and other intangibles | 13,511 |
| Earnings (loss) before interest and taxes | $73,904 |
| lnterest income | 1,009 |
| lnterest expense | 12,427 |
| Earnings (loss) before income taxes | $62,486 |
| lncome tax provision | 21,870 |
| Earnings (loss) | $40,616 |
| Statement of Cash Flows for Year Ended December 31, 1995 | |
| 1995 | |
| Cash Flows from Operating Activities | |
| Net Earnings (Loss) | $40,616 |
| Depreciation | 21,978 |
| Amortization of software & development costs | 5,111 |
| Decrease (lncrease) in accounts receivables | -24,440 |
| Decrease (lncrease) in inventaries | 7,921 |
| Decrease (lncrease) in other current assets | -11,808 |
| lncrease (Decrease) in deferred income | 9,602 |
| lncrease (Decrease) in accounts payable | 12,800 |
| lncrease (Decrease) in income taxes payable | 7,836 |
| lncrease (Decrease) in employee compensation | 1,205 |
| lncrease (Decrease) in other accrued expenses | 905 |
| lncrease (Decrease) in other current liabilities | -12,577 |
| lncrease (Decrease) in deferred income taxes | 1,934 |
| Net cash provided by operating activities | $61,083 |
| Cash Flows from lnvesting Activities | |
| Expended for capital assets | $-36,619 |
| Goodwill amortized | 8,400 |
| Net cash used for investing activities | $-28,219 |
| Cash Flows from Financing Activities | |
| Payment of long-term note | $-4,138 |
| Payment of short-term note | $-18,411 |
| Preferred dividends | $-11,000 |
| Common stock dividends | $-24,429 |
| Net cash used for financing activities | $-57,978 |
| Net cash flows used ($25, 114) | |
| Cash at beginning of year | $169,838 |
| Cash at end of year | $144,724 |
Additional Financial lnformation
OSI’s common stock is currently trading at $2.00 per share. A preferred dividend of $11 per share was paid in 1995, and the current price of the preferred stock is approximately at its par value. Other information pertaining to OSI’s debt and stock follows:
| RATE | ||
| Short-terrn debt: | $8,889 | 8.00% |
| Long-terrn debt: | ||
| Current portion | $18,411 | 10.00% |
| Long-terrn portion | $98,744 | 10.00% |
| Totallong-terrn debt | $117,155 | |
| Stock market risk-free rate | 5.00% | |
| (90-day T-bills) | ||
| Expected return on the | 12.50% | |
| market | ||
| Beta value of OSI’s | 1.2 | |
| common stock | ||
| Growth rate of dividends | 8.00% | |
| Incometax | 35.00% |
Requirements
The management of OutSource, Inc., has asked you to prepare a report explaining EVA (economic value added) and MVA (market value added), how they are calculated, and how they compare with traditional measures of a firm’s financial performance. OSI’s management would also like to know the advantages and disadvantages of using EVA to evaluate the firm’s performance on an ongoing basis as well as in assessing the performance of individual managers throughout its organization. As part of your report, calculate EVA and MVA from OutSource, Inc.’s, financial statements for 1995. Finally, OSI’s management would like to know if EVA can be used as part of an incentive system for its employees and how they should proceed to implement such an incentive system at OutSource, Inc.
[1] ‘¿Quiénes son los verdaderos creadores de riqueza? “RB Lieber, Fortune (Decemher9, 1996), págs. 107-08,110,112,114.
[2] La verdadera clave para crear riqueza “, S. Tully, Fortune (20 de septiembre de 1993), págs. 38-40, 44-48, 50.
Solución en excel y word.
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