Company report
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Company Report. Introduction company overview current events Financial analysis Intrinsic value Recommendation. Introduction. Brief history Products Markets Current issues Management changes. Financial Analysis – Company Attributes. Liquidity Efficiency Profitability Leverage

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Company Report

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Company report

Company Report

  • Introduction

    • company overview

    • current events

  • Financial analysis

  • Intrinsic value

  • Recommendation


Introduction

Introduction

  • Brief history

  • Products

  • Markets

  • Current issues

  • Management changes


Financial analysis company attributes

Financial Analysis – Company Attributes

  • Liquidity

  • Efficiency

  • Profitability

  • Leverage

  • Market value factors


Financial analysis diagnostic tools

Financial Analysis:Diagnostic Tools

  • Ratio analysis – at least two ratios in each category for at least two years!

  • Common-size statements – percentages, not currency

  • Sources and uses of funds


Financial analysis

Financial Analysis

  • Liquidity

    • Current ratio [CA ÷ CL]

    • Quick ratio [(CA – INV) ÷ CL]

  • Efficiency

    • Asset turnover [SALES ÷ TA]

    • Inventory turnover [COGS ÷ INV]

    • Receivables turnover [SALES ÷ AR]


  • Financial analysis1

    Financial Analysis

    • Profitability

      • ROA [NI ÷ TA]

      • ROE [NI ÷ SE]

      • Is there a difference between ROA and ROE?

      • If so, why?

    • DuPont Analysis [ROE]


    Financial analysis2

    Financial Analysis

    • Leverage

      • Debt to assets [LTD ÷ TA]

      • Debt to equity [TD ÷ SE]

      • Interest coverage [EBIT ÷ INT]

    • Market value factors

      • Price-earnings ratio [P ÷ EPS]

      • Price-book value ratio [P ÷ BVPS]


    Intrinsic value

    Intrinsic Value

    • What is your company’s “value” (per share)?

    • Is that different than its “price”?

    • What should be the basis of value for your company: dividends, earnings, other factors?


    Intrinsic value1

    Intrinsic Value

    • If we purchase shares in your company today, and hold them for three years, what cash flows will we receive?

    • Dividends [D1, D2, and D3]

    • Final sale price [P3]


    Intrinsic value2

    Intrinsic Value

    • What are those cash flows worth today?

    • What is their presentvalue (PV)?

    • What is the appropriate discountrate?


    Capital asset pricing model capm required rate of return

    Capital Asset Pricing Model (CAPM)[Required Rate of Return]


    Recommendation

    Recommendation

    • Is your company “overvalued,” or “undervalued”?

    • Overvalued: P > IV [Sell]

    • Undervalued: P < IV [Buy]

    • Fairly valued: P = IV [???]


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