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Company Report

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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  1. Company Report • Introduction • company overview • current events • Financial analysis • Intrinsic value • Recommendation

  2. Introduction • Brief history • Products • Markets • Current issues • Management changes

  3. Financial Analysis – Company Attributes • Liquidity • Efficiency • Profitability • Leverage • Market value factors

  4. 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

  5. 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]

  6. Financial Analysis • Profitability • ROA [NI ÷ TA] • ROE [NI ÷ SE] • Is there a difference between ROA and ROE? • If so, why? • DuPont Analysis [ROE]

  7. 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]

  8. 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?

  9. 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]

  10. Intrinsic Value • What are those cash flows worth today? • What is their presentvalue (PV)? • What is the appropriate discountrate?

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

  12. Recommendation • Is your company “overvalued,” or “undervalued”? • Overvalued: P > IV [Sell] • Undervalued: P < IV [Buy] • Fairly valued: P = IV [???]

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