Enhanced business reporting methodology

• US 20050209943A1
• Filed: 03/02/2005
• Published: 09/22/2005
• Est. Priority Date: 03/02/2004
• Status: Active Grant

• Current Assignee: Accenture Global Services Limited (Accenture PLC)
• Original Assignee: Accenture Global Services GmbH (Accenture PLC)
• Inventors: Ballow, John J., Burgman, Roland, McCarthy, Brian F.
• Granted Patent: US 7,899,725 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 10/10 Office automation; Time management
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

Software encoded on a computer-readable medium when executed performs a method for assessing the performance of a company. The method includes receiving financial data about the company; calculating a Total Economic Profit (TEP) value based in part on the financial data, the TEP value including a current value component and a future value component, determining at least one business component of the company that drives at least one selected from the group comprising the current value component and the future value component, and assessing the at least one business component based in part on at least one selected from the group comprising the TEP value, the current value component, and the future value component. From this data, a Total Return to Shareholders (TRS) value may be calculated with a data processor. The TRS may be decomposed into components and mapped onto a computer-generated display. The data may also be incorporated in corporate management systems and investment analysis systems, and used to generate a set of supplemental financial reports.

Claims

1. A computer-implemented method for preparing corporate financial statements incorporating financial metrics to measure the performance of a company, the method comprising:

receiving financial data about the company;

preparing a Statement of Total Economic Profit (TEP) comprising calculating with a data processor EBIT, NOPAT, WACC, EPCV, EPFV and TEP at least at the beginning and ending of a reporting period based on the received financial data,

preparing a Statement of Enterprise Value (EV) comprising calculating with a data processor market value of equity, market value of debt and enterprise value at least at the beginning and ending of a reporting period based on the received financial data;

preparing a Statement of Total Return to Shareholders (TRS), comprising calculating with a data processor an unadjusted Total Return to Shareholders comprising a change in market value of equity plus dividends paid in the period based on the received financial data;

adjusting the unadjusted TRS comprising deducting the TRS value expected from the movement of the relevant market from the beginning of the reporting period to the ending of the reporting period based on a beta value for the company based on the received financial data and reporting the adjusted TRS in a financial statement; and

displaying the Statements with GAAP financial reports to the financial services community.

2. The computer-implemented method of claim 1, wherein the displayed Statement of Total Economic Profit further includes invested capital, capital charge, ROIC, and the spread between ROIC and WACC.

3. The computer-implemented method of claim 1, wherein the displayed Statement of Enterprise Value (EV) further includes EPCV, WACC, EPCV in perpetuity, current value, future value and debt to equity ratio.

4. The computer-implemented method of claim 1, wherein the displayed Statement of Total Return to Shareholders (TRS) further includes EPCV in perpetuity, Capital available to Equity Holders, Current Value in the Market Value of Equity, Future Value in the Market Value in Equity, Number of Outstanding Equity Shares and the Closing Share Price of the Equity in the reporting period.

5. The computer-implemented method of claim 1, further comprising displaying with the adjusted TRS the value for beta, a market index indicative of a relevant market value at the beginning and ending of the reporting period, a predicted return based on the market values, and a TRS performance score relative to the market index.

6. The computer-implemented method of claim 1 further comprising determining whether to buy or sell securities of the company based on an evaluation of the financial metrics reported in the Statements.

7. The computer-implemented method of claim 1 further comprising electronically transmitting the Statements to a public financial regulatory organization.

8. The computer-implemented method of claim 1 further comprising electronically transmitting the Statements to a management group within the company.

9. The computer-implemented method of claim 8 further comprising incorporating supporting disclosure in the Statements, the supporting disclosure explaining the methodologies and financial data used to calculate certain of the financial metrics included in the statements.

10. A computer-implemented method for preparing corporate financial statements incorporating financial metrics to measure the performance of a company, the method comprising:

receiving in a computer-readable format GAAP financial reports of the company and financial data relating to performance of the company;

calculating with a computer a Net Operating Profit After Tax (NOPAT);

calculating with a computer a Weighted Average Cost of Capital (WACC);

calculating a Return on Invested Capital (ROIC);

calculating a value of Invested Capital of the company, including optional adjustments for operating leases, goodwill and stock options

calculating a Market Value of Debt, including optional adjustments for off balance sheet financing;

supplementing the data from the GAAP financial reports with the calculated results;

and reporting electronically, financial statements including the GAAP financial reports and the supplemented data, and further including market capitalization data and a valuation of a Beta for equity prices of the company'"'"'s publicly traded shares.

11. The computer-implemented method of claim 10 further comprising calculating the financial metrics for at least two reporting periods and reporting a change in the financial metric over the two periods.

12. The computer-implemented method of claim 11, wherein the change in the financial metric is reported in absolute value or as a percentage.

13. A computer program product storing computer instructions therein for performing a method for preparing financial reports to supplement conventional balance sheets and income statements of a company, the program product comprising:

a recording medium readable by the computer; and

the computer instructions stored on said recording medium instructing the computer to perform the method, the instructions and the method including;

calculating supplemental financial metrics Net Operating Profit After Tax (NOPAT), Weighted Average Cost of Capital (WACC), a Return on Invested Capital (ROIC), a value of Invested Capital of the company with optional adjustments for operating leases, goodwill and stock options, and a Market Value of Debt with adjustments for off balance sheet financing;

retrieving financial metrics from the balance sheets and income statements; and

applying the supplemental financial metrics and the retrieved financial metrics to calculate a set of enhance business reporting metrics including a total return to shareholder value adjusted for market fluctuation; and

generating supplemental financial reports using the enhanced business metrics.

14. The computer program product of claim 13, wherein the instructions for performing the method further include calculating an Economic Profit of Current Value (EPCV), and Economic Profit of Future Value (EPFV) and Total Economic Profit (TEP);

and generating supplemental financial reports includes generating a Total Economic Profit report containing a current period and a prior period value for NOPAT, WACC, Invested Capital, EPCV, EPFV and TEP.

15. The computer program product of claim 13, wherein the instructions for performing the method further include determining market value of equity, market value of debt and enterprise value, and generating supplemental financial reports includes generating an Enterprise Value report containing market value of equity, market value of debt, and enterprise value.

16. The computer program product of claim 15, wherein the instructions for performing the method further include calculating a calculating an Economic Profit of Current Value (EPCV) and a value of EPCV in Perpetuity by capitalizing the EPCV over the WACC, and generating supplemental financial reports includes generating the Enterprise Value report containing the EPCV, the WACC and the value of EPCV in Perpetuity.

17. The computer program product of claim 16, wherein the instructions for performing the method further include calculating a change in the market value of equity plus dividends paid in the period based, and calculating the TRS value based on the change in equity prices and dividends received, and wherein generating supplemental financial reports includes generating a TRS report containing the change in market value of equity, closing share prices for the beginning and ending of the reporting period and the unadjusted TRS value.

18. The computer program product of claim 17, wherein the instructions for performing the method further include calculating value of beta for the reporting period, determining the expected movement of company share price due to changes in the relevant market index from the beginning of the reporting period to the ending of the reporting period based on the beta value and adjusting the TRS by the predicted movement of company price due to the change in the market index, and wherein generating supplemental financial reports includes generating a TRS adjusted report containing the relevant market index, beta predict company return due to market movement and an adjusted TRS indicative of the shareholder return above or below the expected return due to market movement.