EVALUATING FINANCIAL This Photo by Unknown Author is licensed under CC BY-SA

PERFORMANCE
Learning Objectives

1. Discuss the purpose, users and contents of basic financial

statements.
2. Define and calculate the major financial ratios and
understand what these ratios can tell us about the entity.
3. Apply different financial statement analysis tools to assess
and gain insights into a company’s performance.
4. Identify the various sources and applications of cash
according to the classifications of cash flow activities.
5. Explain the importance of the statement of cash flows for
decision making purposes.
FINAMAA 2
Financial Statements

• accounting reports with past performance information that

an entity issues periodically
• required for filing with SEC, if entity is public company;
included in annual report sent to shareholders each year

Reports about entity’s performance must be understandable

and fairly presented.
• GAAP)/IFRS provide a common set of rules and a standard format
for public companies to use when they prepare their reports.
• Independent auditor checks the financial statements for reliability
and fair presentation.

FINAMAA 3
Financial Statements

• Purpose
• To provide information about the financial position,
performance and cash flows of an enterprise that is useful
to wide range of users in making economic decisions
• To show the results of management’s stewardship of the
resources entrusted to it
• Management of an enterprise is responsible for preparation
and presentation of its financial statements.
• Board of Directors reviews and approves financial statements
before these are submitted to the shareholders and other
users. FINAMAA 4
Revisiting the
Accounting
Cycle

FINAMAA 5
Types of Financial Statements

• Balance Sheet (Statement of Financial Position)

• Income Statement (Statement of Comprehensive Income)
• Statement of Changes in Stockholders’ Equity
• Statement of Cash Flows

FINAMAA 6
Balance Sheet
• A snapshot in time of the entity’s • Assets
financial position • Resources owned/controlled by entity
• Current/non-current
• Shows liquidity position and capital • Liabilities
structure of entity as of a given date • Obligations of the business
• A summary of assets, liabilities and • Current/non-current
equity of a business at a particular • Equity
point in time • Residual capital
• Contributed capital/accumulated
Assets = Liabilities + Equity earnings

FINAMAA 7
 Assets and Liabilities
ASSETS LIABILITIES
• Current • Current
• Cash or cash equivalent • Expected to be settled during normal
operating cycle or within 12 months
• Expected to be realized or after the reporting period
sold/consumed during normal
operating cycle or within 12 • Entity does not have unconditional
months after the reporting right to defer settlement of liability for
period at least 12 months after reporting
period
• Held primarily for trading
purposes • Held primarily for trading purposes
• Non-current • Non-current
• Residual classification FINAMAA
• Residual classification 8
Income Statement

• summary of entity’s revenues and expenses over a specified

period, ending with net income or loss for the period

Whereas the balance sheet shows the entity’s assets and

liabilities at a given point in time, the income statement shows
the flow of revenues and expenses generated by those assets
and liabilities between two dates.

FINAMAA 9
Income Statement
Total Sales/Revenues
Less Cost of Sales
Gross Profit
Less Operating Expenses
Operating Income
Add (deduct) Other Income (Other Expenses)
Earnings Before Interest and Taxes
Add (deduct) Interest Income (Interest Expense)
Pre-Tax Income
Less Taxes
Net Income FINAMAA 10
 Statement of Cash Flows
• provides explanation regarding change in cash balance from one accounting
period to another
• utilizes information from income statement and balance sheet to determine how
much cash the entity has generated, and how that cash has been allocated, during
a set period
• divided into three sections
• Operating Activities (net income from the income statement. It then adjusts
this number by adding back all non-cash entries related to the firm’s operating
activities)
• Investment Activities (lists the cash used for investment)
• Financing Activities (shows the flow of cash between the firm and its
investors) FINAMAA 11
Statement of Changes in Equity

• Shows changes in stockholders’ equity account from one

accounting period to another
• Profit/loss
• Dividends
• Issuance of new shares
• Other transactions affecting stockholders’ equity e.g.
treasury shares, comprehensive income, revaluation of
assets

FINAMAA 12
Notes to Financial Statements

• Integral part of the financial statements

• Contains additional information
• Brief company description
• Summary of significant account policies
• Breakdown of amounts found in financial statements

FINAMAA 13
Users of Financial Statements

• Investors and analysts

• Creditors and suppliers
• Regulatory agencies
• Customers and potential strategic partners
• Shareholders and directors
• Managers and other employees

FINAMAA 14
Financial Statement Analysis
• Process of selecting, evaluating, and interpreting financial data, along with
other pertinent information, in order to formulate an assessment of a
company’s present and future financial condition and performance
• Designed to show relative strengths and weaknesses of the entity -
intracompany, intercompany, industry averages
• Improving or deteriorating?
• Planning for future course of events
• Basic tools
• Horizontal Analysis
• Vertical Analysis
• Ratio Analysis
FINAMAA 15
Interested Parties
• Managers
• Closest to business from a day-to-day standpoint
• Responsible and accountable for operating efficiency, current and long-term
profitability and effective deployment of capital, human effort and resources
• Owners (investors)
• Specially interested in current and long-term profitability of their equity investment
• Usually expect growing earnings and dividends which will bring about growth in
economic value of their stake
• Lenders and creditors
• Providers of “other people’s money”; extend funds to the business
• Mainly concerned about reliability of interest payments due them, the firm’s ability to
repay the principal and availability of specific residual assets that give them margin of
protection against their risks
• Other groups (employees, labor organizations, government agencies, the public)
• Ability to pay wages, stability of employment, reliability of tax payments, financial
means to meet various social and environmental
FINAMAA obligations 16
• Evaluates a series of financial
statement data over a period
of time to determine
whether an increase or
decrease has taken place
• Increase or decrease can be
expressed as either an
amount or percentage

Horizontal Analysis
FINAMAA 17
Horizontal Analysis of a Balance Sheet
XYZ COMPANY, INC.
Condensed Balance Sheets
December 31
(In millions)

Increase (Decrease)
during 2019
2019 2018 Amount Percent
Assets
Current Assets P 1,902.0 P1,617.1 P 284.9 17.6
Plant assets 2,952.8 2,526.9 425.9 16.9
Other assets 5,513.8 742.0 4,771.8 643.1
Total assets P10,368.6 P4,886.0
FINAMAA
P5,482.6 112.2 18
 Horizontal Analysis of a Balance Sheet
Increase (Decrease)
during 2019
2019 2018 Amount Percent
Liabilities and Stockholders’ Equity
Current liabilities P 2,207.6 P2,482.3 P( 274.7) ( 11.1)
Long-term liabilities 7,289.5 1,506.2 5,783.3 384.0
Total liabilities 9,497.1 3,988.5 5,508.6 138.1
Stockholders' equity
Common stock 195.3 205.8 ( 10.5) ( 5.1)
Retained earnings and other 1,013.3 1,065.7 ( 52.4) ( 4.9)
Treasury stock ( 337.1) ( 374.0) 36.9 9.9
Total stockholders' equity 871.5 897.5 ( 26.0) ( 2.9)
Total liabilities and
stockholders' equity P10,368.6 P4,886.0 P5,482.6 112.2
FINAMAA 19
Percentage Change in Sales

The percentage change in sales for each of the 5 years, assuming 2015 as
the base period is:
XYZ Company
Net Sales (in millions) Base Period 2015

2019 2018 2017 2016 2015

P8,853.3 P6,954.7 P6,984.2 P6,762.1 P6,830.1
129.62% 101.82 % 102.26% 99% 100.0%

FINAMAA 20
• evaluates financial statement data by
expressing each item as a percent of
a base amount

• Total assets is always the base

amount in vertical analysis of a
balance sheet.
• Net sales is always the base amount
in vertical analysis of an income
statement.

Vertical Analysis
FINAMAA 21
Vertical Analysis
XYZ COMPANY
Condensed Balance Sheets
December 31
(In millions)

2019 2018
Assets Amount Percent Amount Percent
Current Assets P 1,902.0 18.3 P1,617.1 33.1
Property Assets 2,952.8 28.5 2,526.9 51.7
Other assets 5,513.8 53.2 742.0 15.2
Total assets P10,368.6 FINAMAA
100.0 P4,886.0 100.0 22
Vertical Analysis
XYZ COMPANY
Condensed Balance Sheets
December 31
(in millions)
2019 2018
Liabilities and Stockholders’ Equity Amount Percent Amount Percent
Current liabilities P 2,207.6 21.3 P2,482.3 50.8
Long-term liabilities 7,289.5 70.3 1,506.2 30.8
Total liabilities 9,497.1 91.6 3,988.5 81.6
Stockholders' equity
Common stock 195.3 1.9 205.8 4.2
Retained earnings and other 1,013.3 9.8 1,065.7 21.8
Treasury stock (337.1) (3.3) ( 374.0) ( 7.6)
Total stockholders' equity 871.5 8.4 897.5 18.4
Total liabilities and stockholders' equity P10,368.6
FINAMAA
100.0 P4,886.0 100.0
23
Vertical Analysis
XYZ COMPANY
Condensed Income Statement
For the Years Ended December 31
(In millions)
2019 2018
Amount Percent Amount Percent
Net sales P8,853.3 100.0 P6,954.7 100.0
Cost of goods sold 4,128.5 46.6 ,327.0 47.8
Gross profit 4,724.8 53.4 3,627.7 52.2
Selling & admin. 3,523.6 39.8 2,551.4 36.7
Nonrecurring chgs. 33.3 0.4 86.5 1.3
Income operations 1,167.9 13.2 989.8 14.2
Interest expense 351.5 4.0 137.5 2.0
Other income (expense),net (12.3) (0.1) 15.4 0.2
Income before income taxes 804.1 9.1 867.7 12.4
Income tax 322.1 3.6 280.0 4.0
Net income FINAMAA P 482.0 5.5 P 587.7 8.4 24
Condensed Income Statements
For the Year Ended December 31, 2019
(in millions)
XYZ Company ABC Inc.
Amount Percent Amount Percent
Net sales P8,853.3 100.0 P7,949.0 100.0
Cost of goods sold 4,128.5 46.6 4,767.0 60.0
Gross profit 4,724.8 53.4 3,182.0 40.0
Selling and administrative expenses 3,523.6 39.8 1,909.0 24.0
Nonrecurring charges 33.3 0.4 190.0 2.4
Income from operations 1,167.9 13.2 1,083.0 13.6
Other expenses and revenues
(including income taxes) 685.9 7.7 622.0 7.8
Net income P 482.0 5.5 P 461.0 5.8

FINAMAA 25
6

Recap: Common Size Analysis

• Common-size analysis - restatement of financial statement information in

a standardized form
• Horizontal common-size analysis: uses amounts in accounts in specified year
as base, and subsequent years’ amounts are stated as a percentage of base
value
• Useful when comparing growth of different accounts over time
• Vertical common-size analysis: uses aggregate value in financial statement for
given year as base, and each account’s amount is restated as percentage of the
aggregate
• Balance sheet: Aggregate amount is total assets.
• Income statement: Aggregate amount is revenues or sales.
7FINAMAA

Financial Ratio Analysis

• use of relationships among financial statement accounts to gauge the
financial condition and performance of a company.
• classifications based on the type of information the ratio provides:
Activity Liquidity Solvency Profitability
Ratios Ratios Ratios Ratios
Ability to
Effectiveness Ability to
manage
in putting its meet short- Ability to
expenses to
asset term, satisfy debt
produce
investment to immediate obligations.
profits from
use. obligations.
sales.
Use of Financial Ratios

A Financial Ratio is an index that relates two accounting numbers Types of

and is obtained by dividing one number by the other. Comparisons

Internal
Ratios standardize numbers in terms of mathematical Comparisons
relationships expressed as percentages, times or days and
External
facilitate comparisons. Comparisons

Ratios are interrelated and are used to highlight weaknesses and

strengths.
FINAMAA 28
Liquidity Ratios
Balance Sheet Ratios
Current Ratio

Current Assets
Liquidity Ratios Current Liabilities

Shows a firm’s ability to cover its current

liabilities with its current assets

FINAMAA 29
Liquidity Ratios
Balance Sheet Ratios
Acid-Test (Quick)Ratio

Current Assets - Inventories

Liquidity Ratios Current Liabilities

Shows a firm’s ability to meet current

liabilities with its most liquid assets

FINAMAA 30
Solvency Ratios
Balance Sheet Ratios
Debt-to-Equity Ratio

Total Debt
Solvency Shareholders’ Equity
Ratios

Measures debt relative to resources

provided by owners

FINAMAA 31
Solvency Ratios
Balance Sheet Ratios
Debt-to-Total-Assets

Total Debt
Solvency Total Assets
Ratios

Shows the percentage of the firm’s assets that

are supported by debt financing

FINAMAA 32
Solvency Ratios
Income Statement
Time Interest Earned
Ratios
EBIT
Interest Charges
Solvency Ratios

Indicates a firm’s ability to cover interest charges

FINAMAA 33
Solvency Ratios
Income Statement / Fixed Charge Coverage
Balance Sheet
Ratios EBIT + Lease Payments
Interest Charges + Lease
Financial Leverage Payments + P/S div before
Ratios tax + pre-tax sinking fund

Indicates a firm’s ability to cover not only interest

payments but also other fixed charges

FINAMAA 34
Activity Ratios
Income Statement /
Receivable Turnover
(Assume all sales are credit sales.)
Balance Sheet
Annual Net Credit Sales
Ratios
Average Trade Receivables

Activity Ratios

Indicates quality of receivables and how

successful the firm is in its collections

FINAMAA 35
Activity Ratios
Income Statement /
Average Collection Period
Balance Sheet
Days in the Year
Ratios
Receivable Turnover

Activity Ratios

Average number of days that receivables are

outstanding (or RT in days)

FINAMAA 36
Activity Ratios
Income Statement /
Balance Sheet Payable Turnover (PT)
Ratios
Annual Credit Purchases
Activity Ratios Average Accounts Payable

Indicates the promptness of payment to suppliers

by the firm

FINAMAA 37
Activity Ratios
Income Statement /
PT in Days
Balance Sheet
Days in the Year
Ratios
Payable Turnover

Activity Ratios

Average number of days that payables are outstanding

FINAMAA 38
Activity Ratios
Income Statement /
Inventory Turnover
Balance Sheet
Cost of Goods Sold
Ratios
Average Inventory

Activity Ratios

Indicates the effectiveness of the inventory

management practices of the firm

FINAMAA 39
Activity Ratios
Income Statement /
Total Asset Turnover
Balance Sheet
Net Sales
Ratios
Average Total Assets

Activity Ratios

Indicates the overall effectiveness of the firm in

utilizing its assets to generate sales
FINAMAA 40
Profitability Ratios
Income Statement /
Gross Profit Margin
Balance Sheet
Gross Profit
Ratios
Net Sales

Profitability Ratios

Indicates the efficiency of operations and

firm pricing policies

FINAMAA 41
Profitability Ratios
Income Statement /
Net Profit Margin
Balance Sheet
Net Profit after Taxes
Ratios
Net Sales

Profitability Ratios

Indicates the firm’s profitability after taking account

of all expenses and income taxes

FINAMAA 42
Profitability Ratios
Income Statement /
Return on Investment
Balance Sheet
Net Profit after Taxes
Ratios
Average Total Assets

Profitability Ratios

Indicates the profitability on the assets of the firm

(after all expenses and taxes)

FINAMAA 43
Profitability Ratios
Income Statement /
Return on Equity
Balance Sheet
Net Profit after Taxes
Ratios
Average Shareholders’ Equity

Profitability Ratios

Indicates the profitability to the shareholders of the firm

(after all expenses and taxes)

FINAMAA 44
• used to dissect the firm’s financial statements and to assess its financial
condition
• merges the income statement and balance sheet into two summary
measures of profitability: ROA and ROE

DuPont System of Analysis

FINAMAA 45
• relates the firm’s ROA to its ROE using the financial leverage multiplier
(FLM), which is the ratio of total assets to common stock equity:

Modified DuPont Formula

FINAMAA 46
 Ratio Significance Formula
Indicates immediate short-term debt
Working capital Current assets – current liabilities
paying ability
Measures proportion of assets
Equity ratio Total equity / Total assets
provided by owners
Cash provided by operations –
Indicates cash available for paying
Free cashflow capital expenditures – dividends
dividends or expanding operations
paid
Earnings per share Shows net income earned on each (Net income – PS dividend)/ Ave CS
(EPS) share of common stock outstanding
Indicates relationship between
Price earnings ratio market price per share and earnings Stock price per share / EPS
per share
Shows % of earnings distributed in
Payout ratio Cash div on CS / Net income
form of dividends

Other Ratios
FINAMAA 47
 Determine the objective/s of the
analysis.

Asset Debt
Practical Profitability Liquidity
utilization utilization
Steps in
Financial
Statement
Analysis Consider retrospective, current, and
prospective conditions of the industry,
as well as external variables (socio-
economic, political).

FINAMAA 48
 Understand
• Understand the firm you are analyzing (e.g.
mission/vision, current industry status, strategic
plans).
Practical Steps Assess/analyze
in Financial • Assess/analyze the financial statements.
• Horizontal (dynamic measure, trend ratios)
Statement • Vertical (static measure, structural ratios)

Analysis Interpret
• Interpret results.

Draw
• Draw conclusions.

FINAMAA 49
Cautions for Doing Ratio Analysis
Ratios must be considered together; a single ratio by itself means relatively little.

Financial statements that are being compared should be dated at the same point in time.

Use audited financial statements when possible.

The financial data being compared should have been developed in the same way.

Be wary of inflation distortions.

Ratios with large deviations from norm indicate possibility of problem -> investigate.

FINAMAA 50
Classifications of Cash Flow Activities
• Operating
• summarizes cash receipts and cash payments from principal
revenue-producing activities
• transactions that affect the net income
• Investing
• shows cash transactions for acquisition and sale of non-current
assets
• transactions that affect long-term assets
• Financing
• reports cash transactions related to cash investments, cash
withdrawal, and borrowings by owner
• transactions that affect capital and borrowings of the entity
FINAMAA 51
Net Income Versus Net Cash Provided by
Operating Activities
Accrual Basis of Accounting Cash Basis of Accounting

Earned
Revenues

Adjustments to
Reconcile Net Net Cash
Income to Net Provided/Used
Net Income by Operating
Cash
Provided/Used Activities
by Operations

Incurred
Expenses

FINAMAA 52
Importance/Usefulness of Statement of Cash
Flows
• allows users of financial statement to understand how entity’s operations
are running, where its cash is coming from and how it is being spent
• shows how good the entity is in realizing adequate cash from its main
operating business

Many investors believe cash flow is less susceptible to management

manipulation and fraud than traditional accounting measures such as net
income.

Although reliance on cash flows to the exclusion of accrual accounting is

inappropriate, comparing cash from operations to net income can reveal
important information about the “quality” of reported net income.
FINAMAA 53
Point to Remember…
Statement of Income may show healthy
good top line and bottom line figures,

but

Statement of Cash Flows will reveal the

entity’s liquidity that is so necessary for
the business to survive and grow.

FINAMAA 54
Assessing Liquidity, Solvency, and Profitability
Using Cash Flows
▪ Current Cash Debt Coverage Ratio
▪ Cash flow from operations divided by average current liabilities
▪ Often considered a better representation of liquidity on average day because cash from
operations involves the entire year rather than a balance at one point in time
▪ Cash Debt Coverage Ratio
▪ Cash flow from operations divided by average total liabilities
▪ Measure of solvency using cash figures (cash generated from operations)
▪ Cash Return on Sales Ratio
▪ Cash flow from operations divided by sales
▪ Indicates the company's ability to turn sales into pesos.
▪ Free Cash Flow
▪ cash left from operations after adjustment for capital expenditures
▪ Company must invest in new fixed assets just to maintain its current level of operations
and it must at least maintain dividends
FINAMAA
at current levels to satisfy investors. 55
Free Cash Flow
Free cash flow is often computed with the following formula:
Net Cash
Provided by Capital
Operating – Expenditures – Dividends Paid = Free Cash Flow
Activities

Alternative formula:
Operating cash flow (OCF) – net fixed asset investment (NFAI) – net
current asset investment (NCAI)
Where: NFAI = ∆ net fixed assets + depreciation
NCAI = ∆ current assets – ∆ (AP + accruals)
FINAMAA 56
Operating Cash Flow

▪ cash flow a firm generates from its normal operations

▪ calculated as net operating profit after taxes (NOPAT)
plus depreciation
▪ NOPAT = EBIT x (1-T)
▪ OCF = [EBIT x (1 – T)] + Depreciation

FINAMAA 57
Example 1
The data on the next slide represent selected information from an entity’s
comparative balance sheet and income statement as of and for the years
ended December 31, 2019 and 2018.
Required: Compute for the following: (Use 360 days, where applicable)
1. current ratio for 2019
2. acid-test ratio for 2018
3. inventory turnover for 2019
4. accounts receivable turnover for 2019
5. days’ sales in receivables for 2019
6. debt ratio for 2019
7. times interest earned for 2019
8. rate of return on net sales for 2018
9. rate of return on total assets for 2019
10. rate of return on ordinary shareholders’ equity for 2019
11. earnings per share for 2019
12. price-earnings ratio for 2019FINAMAA 58
 2019 2018
Net sales (all on credit) 370,000 333,000
Cost of goods sold 160,000 150,000
Gross profit 210,000 183,000
Income from operations 95,000 87,000
Interest expense 8,000 8,000
Net income 70,000 57,000
Cash 10,000 14,000
Accounts receivable, net 30,000 25,000
Inventory 43,000 40,000
Prepaid expenses 5,000 7,000
Total current assets 88,000 86,000
Total non-current assets 112,000 104,000
Total current liabilities 70,000 60,000
Total non-current liabilities 40,000 45,000
Ordinary share capital, no-par * 60,000 60,000
Retained earnings 30,000 25,000
* 10,000 ordinary shares have been issued and outstanding since the company was established. They
had a market value of P90 per share at December 31, 2018 and were selling for P91.50 per share at
December 31, 2019. FINAMAA 59
Example 2

My Shop had cash flows from investing activities of P2,567,000

and cash flows from financing activities of P3,459,000.

The balance in the Cash account was P950,000 at the beginning

of 2019 and P1,025,000 at the end of 2019.

Required:
Calculate MY Shop’s cash flow from operations for 2019.

FINAMAA 60
Additional Readings
• https://www.thebalance.com/guide-to-
understanding-financial-statements-357512

• https://courses.lumenlearning.com/introbusines
swmopen/chapter/reading-understanding-
financial-statements/

• https://corporatefinanceinstitute.com/resources
/knowledge/finance/analysis-of-financial-
statements/

• https://www.linkedin.com/learning/corporate-
financial-statement-analysis/what-is-financial-
statement-analysis?u=35279340
FINAMAA 61
Self-test Questions

1. Describe the purpose of each of the four major financial statements.

2. Enumerate the basic users of financial statements. How do they use
these financial statements?
3. Explain the statement “While the balance sheet can be thought of as a
snapshot of a firm’s financial position at a point in time, the income
statement reports on operations over a period of time.”
4. Ratio analysis is performed by three main groups: credit analysts, stock
analysts, and managers. What is the primary emphasis of each group
and how would such emphasis affect the ratios they focus on?
5. What three areas of analysis are combined in the modified DuPont
formula? Explain briefly.
FINAMAA 62
For each of the following 1. Retained earnings 7. Trading securities
items, indicate whether
the item is on the 2. Income tax expense 8. Income tax payable
Balance Sheet (BS) or 3. Accounts receivable 9. Selling and
Income Statement (IS). administrative expense
If on BS, designate
4. Share premium 10. Sales
appropriate category
(CA, PPE, OLTA, CL, LL, 5. Bonds payable 11. Accrued expenses
SHE).
6. Accounts payable 12. Plant and equipment

Learning Activity 1
FINAMAA 63
The data on the right side apply to MACFM
Co. (amounts in millions of pesos). Cash and cash equivalents 120.00

MACFM has no preferred stock – only Fixed assets 267.50

common equity, current liabilities, and Sales 1,100.00
long-term debt. Net income 52.00
Current liabilities 106.80
Required: Calculate MACFM’s Current ratio 3.10X
DSO (based on 365-day year) 41.25 days
(1) Accounts receivable, (2) current assets,
(3) total assets, (4) ROA, (5) common ROE 12.50%
equity (6) quick ratio, (7) long-term debt

Learning Activity 2
FINAMAA 64
Learning Activity 3

You are considering an investment in Jambee Corporation and

want to evaluate the firm’s free cash flow. From the 2019
income statement, you see that Jambee earned an EBIT of P62
million, paid taxes of P17 million and its depreciation expense
was P5 million. Fixed assets increased by P32 million from
2018 to 2019. The firm’s current assets increased by P20
million and spontaneous current liabilities increased by P12
million.

Calculate Jambee’s operating cash flow and free cash flow for
2019.
FINAMAA 65
 “Ideally, the balance sheet
would provide accurate
assessment of the true
value of the firm’s equity.
Unfortunately, this is
unlikely to be the case...”

FINAMAA 66