Analyze the consolidated financial statements for the years
2
023 and 2022 considering the following aspects:
1
. Operating leverage2. Financial leverage3. Combined leverage4. Relationship between ROA, ROE and WACC in the company 5. Liquidity and solvency ratios6. Company’s dividend policy & strategy (last10years)7. Stock price development (last10years)8. Credit risk, Market risk, Operational risk and Liquidity risk 9. Impact of IFRS 16 in the company(optional)
Evaluate your findings and decide what you would do next.
1
Recommendations:
Use consolidated figures. Be aware of the differences between Group and AG, Inc, SA etc.
Include in the Appendix the annual report’s consolidated figures(BalanceSheet and Income Statement)
Use ONLY the official information from the company’s webpage
Explain how the results are calculated using tables, formulas and sourcesclosed to the results, for example:
5. You can supplement your analysis with graphics. As an example:
2
When calculating Ratios be aware of minority interests (non-controlling interest), Spin-offs, discontinued operations, restatements (revision of one or more of a company’s previous financial statements to correct an error or to include a new reporting standard), and extraordinary items
Be aware of Style Guide
Pawelzik, L. BA IB 19 Applied Financial Management
CBS International Business School
Financial Analysis:
A Case Study on Siemens Energy AG
Term Paper for “Applied Financial Management”
Summer Semester 2021
Lecturer: Roberto Anero
Leonardo Pawelzik
BA International Business/ Finance
Student No. 1192200118
Word Count: 2962
Table of Contents
1. Introduction…………………………………………………………………………………….. 3
1.1
Siemens Energy AG and its business………………………………………….. 3
1.2
Motivation and current importance …………………………………………… 3
1.3
Aim of paper …………………………………………………………………………….. 4
2. Siemens Energy AG – A Case Study …………………………………………………… 4
2.1
Operating Leverage ………………………………………………………………….. 5
2.2
Financial Leverage ……………………………………………………………………. 5
2.3
Combined Leverage ………………………………………………………………….. 5
2.4
Return on Assets……………………………………………………………………….. 5
2.5
Return on Equity ………………………………………………………………………. 6
2.6
Weighted Average Cost of Capital (WACC) ………………………………. 6
2.7
Liquidity Ratios ………………………………………………………………………… 6
2.8
Solvency Ratios …………………………………………………………………………. 7
2.9
Company’s Dividend Policy & Strategy …………………………………… 10
2.10 Stock Price Development Since October 2020 …………………………… 10
3. Main Findings ……………………………………………………………………………….. 11
4. Outlook …………………………………………………………………………………………. 12
2
1. Introduction
1.1
Siemens Energy AG and its business
About one sixth of all electricity generated worldwide is based on Siemens Energy AG’s
technology. Siemens Energy AG belongs to one of the leading players within the futuristic
sustainable energy sector. The DAX listed company Siemens Energy AG specified on five
core businesses: First, the generation’s portfolio which comprises turbines, generators, and
engines. Moreover, the company offers suitable control panels and electrical systems.
Second, the transmission department is responsible to transform kinetic power supplied by
the generation division into electric power. Third, the industrial application division supports
several industries, such as the on and offshore industry, the marine industry, and the fiber
industry in order to convert to a lower-carbon world aiming at making the before-mentioned
industries more efficient, safe, and reliable. The new energy business, which develops
modern technologies in the field of decarbonized energy systems, represents the fourth
business within the energy value chain. At last, the Siemens Gamesa Renewable Energy
department targets development, manufacture, and supply of renewable resources (Siemens
Energy AG Sustainability, 2020).
1.2
Motivation and current importance
Most enterprises have already reached a certain maturity within their business sector. The
case study on Siemens Energy AG was chosen in order to demonstrate how such a young
company in contrast to long-established enterprises evolves regarding its financial standing
and business progress. Moreover, the energy sector is transforming from gas and power to
sustainable new projects, such as renewable energies that are very futuristic and thus create a
new market niche. Since fifty percent of its portfolio has already been decarbonized, Siemens
Energy AG helps its customers to switch to a further sustainable world (Siemens Energy AG
Investor Relations, 2020).
3
1.3
Aim of paper
The following scientific paper will deal with the topic of Siemens Energy AG and will give
an insight into the financial reports and its potentials in the power supply sector.
In order to respect the word count, this paper will be divided into the following three parts:
After a brief introduction of Siemens Energy AG, the current relevance of this economic
industry will be discussed. In part two the latest financial reports and its fundamentals will be
critically analyzed and respectively compared with competitors in the same economic
subsector. Finally, future trends and tendencies of the energy supply field will be highlighted.
Moreover, part three will give a conclusion. The paper will end with a short outlook.
2. Siemens Energy AG – A Case Study
In the following an analysis of the consolidated financial statements for the years 2020 and
2019 will be made due to the fact that Siemens Energy AG is relatively new on the market,
i.e., financial data of the year 2018 is not completely available. All data stipulated, calculated
and evaluated along with the relevant financial formulas in this paper are based on the figures
of the annual report of 2020 by Siemens Energy AG (Siemens Energy AG, 2020).
The analysis covers the aspects as follows:
Table 1: Key figures (in millions of €)
Figure
Net income (loss)
Tax
Interest
EPS
EBT
EBIT
Sales (Revenue)
Shareholders‘ Equity
Total Current Assets
Total Current Liabilities
Inventory
Interest Expenses
Total Liabilities
Total Assets
Total Equity
2020
(1,859)
276
(137)
(2.21)
(2,135)
(2,003)
27,457
14,942
22,554
21,669
6,530
138
27,641
43,032
15,390
2019
282
(35)
(248)
0.22
317
708
28,797
11,856
24,917
23,487
7,148
248
31,952
45,041
13,089
YoY Change (%)
(1,104.54%)
(773.50%)
(382.91%)
(4.88%)
20.60%
(10.47%)
(8.39%)
(9.46%)
(79.71%)
(15.59%)
(4.67%)
14.95%
4
2.1
Operating Leverage
% 𝐶ℎ𝑎𝑛𝑔𝑒 𝑜𝑓
𝐸𝐵𝐼𝑇 (382.91%)
=
= 78.47
𝑆𝑎𝑙𝑒𝑠
(4.88%)
Because of Covid-19, expenses and leverage were very high leading to an unsignificant
calculation of operating leverage. Therefore, the company dropped under the break-even
point reached in 2019. The financials of 2019 should be compared with 2018. However, the
recent spinoff from Siemens Energy AG led to a lack of annual reports.
2.2
Financial Leverage
% 𝐶ℎ𝑎𝑛𝑔𝑒 𝑜𝑓
𝐸𝑃𝑆
(1,104.54%)
=
= 2.88
𝐸𝐵𝐼𝑇
(382.91%)
The financial leverage of 2.88 indicates volatility. As long as the operating income is rising, a
high leverage will not be problematic. Once the operating income declines, high debt cannot
be easily managed. A higher financial leverage proves that Siemens Energy AG is using
debts to finance its assets and operations.
2.3
Combined Leverage
% 𝐶ℎ𝑎𝑛𝑔𝑒 𝑜𝑓
𝐸𝑃𝑆
(1,104.54%)
=
= 226,34
𝑆𝑎𝑙𝑒𝑠
(4.88%)
A higher degree of combined leverage demonstrates how earnings are affected by sales
activity and generally entails a greater risk due to high volatility. It is important to mention
that in the case of 2020 financial results of Siemens Energy AG cannot be compared with the
usual leverage as Covid-19 impacted the whole business.
2.4
Return on Assets
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 (2020) =
(1,859)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
=
= (4.32)%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 43,032
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 (2019) =
(282)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
=
= 0.63%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 45,042
In the year 2020 the Coronavirus had an impact on Siemens Energy AG resulting in a
negative return on assets which in constant state would seriously harm business.
5
In 2019, Siemens Energy AG’s return on assets were healthier but very low showing that the
firm is not efficiently using its assets.
2.5
Return on Equity
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 (2020) =
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
(1,859)
=
= (12.44)%
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′ 𝐸𝑞𝑢𝑖𝑡𝑦 14,942
The Coronavirus had a huge impact on Siemens Energy AG’s return on equity in 2020 as
well. The return on equity was strongly negative leading to poor profits and serious damages
for the company.
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 (2019) =
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
282
=
= 2.38%
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′ 𝐸𝑞𝑢𝑖𝑡𝑦 11,856
As the company is really young it has just arrived at its turning point to make profit. The
return on equity should reach at least 10%. In the case of Siemens Energy AG, it is very low
as the company had no chance to show its full potential.
2.6
Weighted Average Cost of Capital (WACC)
!
#
𝑊𝐴𝐶𝐶 = P” ∗ 𝑅𝑒R + T” ∗ 𝑅𝑑 ∗ (1 − 𝑇𝑐)V =5.83%
In contrast to other competitors within the energy sector, such as CGN Power CO Ltd., NTCP
Ltd., Power Assets Holdings Ltd. or China National Nuclear Power CO Ltd., Siemens Energy
AG has a comparably high weighted average cost of capital. The WACC of 5.83% reveals
that the company has to pay its investors an average of 0.0583€ in return for every 1€ in extra
funding (Gurufocus, 2021).
2.7
Liquidity Ratios
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 (2020) =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
22,554
=
= 1.04
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 21,669
The current ratio reveals whether a company is capable of paying its short-term obligations.
In 2020, Siemens Energy AG proved to have sufficient liquidity by paying its short-term
liabilities using its short-term assets. Although the company’s output was not at the best
possible level, Siemens Energy AG was able to meet its short-term obligations without any
serious liquidity problems.
6
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 (2019) =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
24,917
=
= 1.06
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 23,487
Compared to the year 2020, the current ratio has barely changed. That is why Siemens
Energy AG is as financially liquid as in 2019 with current assets covering current liabilities.
𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 (2020) =
(𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) (22,554 − 6,530)
=
= 0.74
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
21,669
The quick ratio of Siemens Energy AG in 2020 was considerably low indicating that the
company had to struggle when paying its debts. The low quick ratio of 0.74 demonstrates that
Siemens Energy AG cannot pay its current liabilities without selling its inventory. As a
consequence, the company turned out to have insufficient short-term liquidity to pay off its
debts only by using its near-cash-assets.
𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 (2019) =
(𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) (24,917 − 7,148)
=
= 0.76
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
23,487
In 2019, the company’s quick ratio and ability to meet its current liabilities by using its nearcash-assets had hardly changed. In both years, Siemens Energy AG could not pay its current
liabilities without selling its inventory which in turns proved that the company is illiquid.
2.8
Solvency Ratios
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐴𝑠𝑠𝑒𝑡𝑠 𝑟𝑎𝑡𝑖𝑜 (2020) =
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 27,641
=
= 0.64
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
43,032
The firm’s debt-to-assets ratio of 64% is considered to be a very poor a ratio. As long as the
cash flow is stable enough, Siemens Energy AG will not have any issues. But if the business
does not generate enough cash flow, the company may struggle to service its debts.
Companies showing a similarly low ratio might also have difficulties in borrowing money. In
the case of Siemens Energy AG, total debts divided by total assets made up 64% of the total
debts.
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐴𝑠𝑠𝑒𝑡𝑠 𝑟𝑎𝑡𝑖𝑜 (2019) =
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 31,952
=
= 0.71
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
45,041
In 2019, the debt-to-assets of Siemens Energy AG was even worse. As in 2020, the company
could still meet its obligations as long as cashflow stayed stable, however, higher risks had to
be taken into consideration. Total debts divided by total assets made up 71% of the total
7
debts. Comparing the total liabilities of 2019 and 2020, Siemens Energy AG was able to
manage a decrease of 13,5%. This reduction is a healthy progress which should be continued.
𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 (2020) =
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 15,390
=
= 0.36
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 43,032
The equity ratio demonstrates how effectively Siemens Energy AG funds its asset
requirements without using debts. The higher the ratio, the less debt is needed to fund asset
acquisition. In 2020, the above-mentioned ratio indicated that the company leveraged its
debts. Siemens Energy AG held considerably more debts (27,642) than equity from its
shareholders which was significantly high by 12,252. Consequently, lending institutions are
more likely to extend credit to companies with a higher ratio. Moreover, investors tend to
look for companies that know how to gather and fund asset requirements without occurring
substantial debt as it is less risky for investors.
𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 (2019) =
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 13,089
=
= 0.29
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 45,041
In 2019, the above-mentioned ratio showed that Siemens Energy AG leveraged its debts. It
held substantially more debts (31,952) than equity from its shareholders which is
tremendously high by 18,863.
In 2019, the equity ratio had been even worse than in 2020. The low ratio value also
demonstrated that Siemens Energy AG was generally financially less strong. In addition, it
showed a weaker long-term position of solvency than companies with a higher ratio.
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 (2020) =
(2,003)
𝐸𝐵𝐼𝑇
=
= (14.51)
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
138
The interest coverage ratio determines how easily a company can pay interest on its
outstanding debts. As the year 2020 was quite rough for Siemens Energy AG due to Covid19, the EBIT was drastically negative. Therefore, Siemens Energy AG’s ability to meet
interest expenses was questionable. Stability in interest coverage ratios is one of the most
important facts for investors or analysts as it reveals if a company is able to pay its debts in
the future. In 2020, Siemens Energy AG’s ratio severely worsened and the debts became a
burden for the company’s financial position. The company was not generating sufficient
revenues to satisfy its interest expenses.
8
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 (2019) =
𝐸𝐵𝐼𝑇
708
=
= 2.85
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 248
In 2019, the interest coverage ratio of Siemens Energy AG was moderately healthy compared
to 2020. In 2019, the interest coverage ratio illustrated that Siemens Energy AG was quite
stable with a solid and consistent revenue and could service its debts, at least in short-term.
Siemens Energy AG is expected to have a positive EBIT in 2021, thus the negative interest
coverage ratio in 2020 being an exception.
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 (2020) =
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
27,641
=
= 1.85
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 $ 𝐸𝑞𝑢𝑖𝑡𝑦 14,942
The debt-to-equity ratio reflects the ability of shareholder equity to cover all outstanding
debts in the event of a business downturn. Moreover, it can be used to evaluate how much
leverage a company uses. In 2020, Siemens Energy AG used 1.85€ in debt for every 1€ of
equity which is suboptimal, however, still acceptable. There is nevertheless an increased risk
of being unable to repay which might overburden a company with high interest payments. As
Siemens Energy AG struggled during the pandemic, the debt-to-equity ratio largely improved
but the company needs to decrease its debts in the near future.
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 (2019) =
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
31,952
=
= 2.70
$
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝐸𝑞𝑢𝑖𝑡𝑦 11,856
While in 2019 the debt-to-equity ratio of Siemens Energy AG was 2.7, i.e., the debt
outstanding is 2.7 times larger than its equity. These higher debts might result in volatile
earnings due to additional interest expense as well as increased vulnerability to business
downturns. Compared to 2020, the debt-to-equity ratio of 2019 was sharply higher and
improved slightly in 2020.
9
2.9
Company’s Dividend Policy & Strategy
As a consequence of the net income of Siemens Energy AG being a loss, no dividend will be
paid for the fiscal year of 2020. At the Annual Shareholder’s Meeting 2020, Siemens Energy
AG proposed a dividend whose distribution volume is 40% to 60% of the group’s net income
attributable to shareholders of Siemens Energy AG in the following fiscal years. For this
purpose, the net income may be adjusted for extraordinary non-cash effects. In general, the
company plans to fund the dividend payout from available free cash flow considering
dividend payments received from Siemens Gamesa Renewable Energy which intends to
propose a dividend in a distribution volume no less than 25% of its net income. Since
dividend data from Siemens Energy AG is only available for the year 2020, a closer look has
to be taken at the mother company, Siemens AG, and its dividend policy and strategy of the
last 10 years. The dividend of Siemens AG in 2011 was 2.41% and increased to 2.78% until
2019. From 2011 to 2013 it amounted to 2.41% and afterwards increased to 2.78% in 2019.
In 2020, the dividend was shortened to 2.75% due to the high costs induced by Covid-19.
After the spin-off from its mother company, Siemens Energy AG is expected to adopt
the dividend policy and strategy of Siemens AG. The payout ratio of Siemens AG is around
56%. Thus, it is assumed that Siemens Energy AG will show a similar payout ratio
(Morningstar, 2021).
2.10
Stock Price Development Since October 2020
Siemens Energy AG started trading on the Frankfurt Stock Exchange on September 28, 2020.
It was initially listed at a price of 22.01€.
The whole market and especially the DAX saw a bearish period from September 2020 until
the beginning of November 2020. This bearish phase was influenced by Covid-19 and
showed an exaggerated downward movement in the market which led to an unstable period.
For that reason, the further development on the stock market was unforeseeable (Traderfox
GmbH, 2021).
Thus, the stock-price of Siemens Energy AG reached its all-time low at 18.37€. The
beginning of 2021 was a turning point for the stock of the company. The stock price nearly
doubled within two and a half months and reached its all-time-high at 34.86€. The market
again exaggerated in a new euphoric way leading to slow and volatile decrease in stock price.
In May 2021, the stock price is pending between 23€-26€. The Beta was 0.56, i.e. Siemens
10
Energy AG’s stock does not react as strong as the whole market. Therefore, the volatility of
Siemens Energy AG’s stock price is very low. In addition, the PEG ratio of 0.32 for the
expected net income of the fiscal year of 2021 (May 2021) is below one which usually states
a good indicator for an underrated stock price (Onvista, 2021).
3. Main Findings
After having completed the case study on Siemens Energy AG in the period of 2019-2020,
the following key findings are obvious:
On the one hand, Siemens Energy AG has a high financial leverage in general because the
energy sector is very capital-intensive an industry, increasing the leverage degree
tremendously. Although the debt-to-equity ratio of Siemens Energy AG is still questionable,
it has already improved from 2.70 to 1.85 since 2019 which demonstrates a sound
development.
In contrast to Siemens Energy AG’s competitors, the weighted average cost of capital was
too high showing 5.83%. Therefore, labor and capital (e.g. machine) costs have to be
drastically reduced.
On the other hand, a positive indicator for Siemens Energy AG’s stock is the PEG ratio of
0.32 expressing an undervalued stock price.
As a new-established company, Siemens Energy AG has not created a dividend policy yet, its
stock has never paid out dividend to its shareholders.
It has to be underlined that an unforeseeable factor, Covid-19, stopped the progress of this
innovative company entailing financial irregularities.
11
4. Outlook
Siemens Gamesa Renewable Energy, a subsidiary of Siemens Energy AG, is profitable while
others, such as Gas & Power are not sufficiently financially stable yet
and still need to be optimized in the future.
It will be crucial for Siemens Energy AG to return to positive net income in order to continue
a heathy business. The green energy sector, however, has a realistic future with many
business opportunities to come as more and more countries fight against the climate change
and look for suitable sustainable technologies e.g., from Siemens Energy AG.
It is difficult to evaluate the further business development of Siemens Energy AG, as the
financial results of 2020 are not meaningful due to the following reasons: COVID-19 and the
relatively new position of this business industry on the market. Nevertheless, there will be a
future for this innovative and sustainable market. This is proven by the fact that the German
government subsidizes the green energy industry.
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References
Gurufocus (2021, May 14) Siemens Energy AG WACC Retrieved 14.05.21 From
https://www.gurufocus.com/term/wacc/OTCPK:SMNEY/WACC-/Siemens-Energy-AG
Morningstar (2021, May 12) Siemens AG Morningstar Rating Retrieved 14.05.21 From
https://www.morningstar.com/stocks/xstu/sie/dividends
Onvista (2021, May 13) Onvista Siemens Energie AG Aktie Retrieved 14.05.21 From
https://www.onvista.de/aktien/Siemens-Energy-Aktie-DE000ENER6Y0
Siemens Energy AG (2020, December 7) Annual Report Retrieved 14.05.21 From
https://assets.siemens-energy.com/siemens/assets/api/uuid:e28c0ec6-2e23-4dc4-811a7eccc4bd035f/2020-12-07-siemens-energy-ag-annual-report-2020.pdf
Siemens Energy AG Sustainability (2020, November 27) Sustainability Report Retrieved
14.05.21 From https://assets.siemens-energy.com/siemens/assets/api/uuid:ce31f501-43514511-8c60-2715119fab88/sustainability-report-2020-siemens-energy.pdf
Traderfox GmbH (2021, May 13) Traderfox Realtime Stock Screening Retrieved 14.05.21
From https://traderfox.de/aktien/14854987-siemens-energy-ag/
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Applied Financial Management Paper
Analyze the consolidated financial statements (+ / – 3,000 words) for the years
2023 and 2022 considering the following aspects:
1. Operating leverage
2. Financial leverage
3. Combined leverage
4. Relationship between ROA, ROE and WACC in the company
5. Liquidity and solvency ratios
6. Company’s dividend policy & strategy (last 10 years)
7. Stock price development (last 10 years)
8. Credit risk, Market risk, Operational risk and Liquidity risk
9. Impact of IFRS 16 in the company (optional)
Evaluate your findings and decide what you would do next.
1
Recommendations:
1. Use consolidated figures. Be aware of the differences between Group and AG,
Inc, SA etc.
2. Include in the Appendix the annual report’s consolidated figures (Balance Sheet
and Income Statement)
3. Use ONLY the official information from the company’s webpage
4. Explain how the results are calculated using tables, formulas and sources
closed to the results, for example:
5. You can supplement your analysis with graphics. As an example:
2
6. When calculating Ratios be aware of minority interests (non-controlling
interest), Spin-offs, discontinued operations, restatements (revision of one or
more of a company’s previous financial statements to correct an error or to
include a new reporting standard), and extraordinary items
7. Be aware of Style Guide
3
4
Industry Sectors
5
Frequently Asked Questions
1. Hi Roberto, I hope your having a good easter. I just have a quick question
regarding the paper. I saw all the documents and what has been uploaded and
I am aware of the calculations on what we have to do. But what exactly is the
paper meant to be based on, like to topic title and what is the best website to
find the financial statements of the company. Because I chose Lufthansa and I
have been on Morningstar but I just want to be sure that I am using the right
one. (smile) Thank you
Answer:
Dear „XXX”, Thank you very much for your mail. The issues you need to describe
in your paper are clearly mentioned in the Word file: “Applied Financial
Management Paper” in Stupo. The best way to do this is considering ONLY the
“OFFICIAL INFORMATION” from the company’s webpage:
https://www.lufthansagroup.com/en/themes/annual-report-2020.html or
https://www.lufthansagroup.com/en/themes/annual-report-2019.html
Afterwards you need to answer the topics (i.e. operating and financial leverage)
according to the information previously analyzed in the annual reports. Please let
me know if you have additional questions
Many greetings Roberto
6
2. Hello Mr. Anero, I have a question concerning the ROIC and ROA. I did the
calculations just like we have learned in the course but they dont correspond
with the ROIC and ROA on their website. Which ones should i use and why is
there a difference?
Answer:
As I’ve mentioned in the course, the companies can decide how to calculate
ratios like ROCE, ROIC etc. That’s why it is a little bit annoying because you
need to understand how each company calculates them. Please use the
calculation used in the annual reports and compare the results what we
discussed in class
7
3. Hola Roberto, ich hoffe, dir geht es gut und du bist gesund.
Vielleicht kannst du mir bei einer Frage bez. unserer Hausarbeit weiterhelfen.
Ich war gerade dabei die Ratios fuer die BayerAG auszurechnen und da ist mir
aufgefallen, dass die Zahlen z.B. fuer Total Assets sehr verschieden sind.
Bayer’s annual report fuer 2019 sagt beispielsweise 84,586 million und auf
Morningstar sind 126,258 million eingetragen.
Mit welchen Zahlen soll ich nun rechnen? Ich weiss, dass die Unternehmen
ihre annual reports teilweise mit kreativen Accountingtricks “manipulieren” aber
naja, ich weiss jetzt nicht so recht, welche Zahlen verlaesslicher sind.
Vielen Dank und liebe Gruesse,
Answer:
Hi XXX, gut dass du es fragst. Ganz wichtig: Immer die Infos aus der ersten
Quelle nehmen. D.h. aus den Jahresabschlüssen der Unternehmen.
https://www.bayer.com/sites/default/files/2021-02/Bayer-Annual-Report2020.pdf
Laut dem Jahresabschluss die Total Assets für das Jahr 2019 betrug 126.648
Mio. Eur. Könnte es sein, dass Deine Werte, die von der Bayer AG sind und
nicht die konsolidierten Zahlen der Bayer Gruppe?
Sorry… 126.174 Mio. Eur
Ich habe nicht aufgepasst. Der andere Wert ist
der Anfangsbestand für 2019…
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