Hi Rocky. I'm going to try to simplify one of the most difficult and intriguing things in corporate finance. I'm pasting a file in which i have some stuff from the net/books and the rest what i had learned in MBA
1.Economic Analysis
2.Industry Analysis :
(a) Customers (companies will always disclose in their 10-K if any one customer accounts for a majority of revenues)
(b)Market Share among firms (Market share is important because of economies of scale. When the firm is bigger than the rest of its rivals, it is in a better position to absorb the high fixed costs of a capital-intensive industry)
(c)Growth : Increase in customers
(d)Competition : Porter's Five and Price Analysis
(e)Regulation : Risk and Return
(f )Business Cycle : 4 phases
3.Business Model of the Company (10k report) and (10q report
4.Drivers for Future Growth of a Company
5.Competitive Advantage (Porter's Views)
sustainable competitive advantage gained by:
A unique competitive position
Clear tradeoffs and choices vis--vis competitors
Activities tailored to the company's strategy
A high degree of fit across activities (it is the activity system, not the parts, that ensure sustainability)
A high degree of operational effectiveness
6.Management Analysis
Management Discussion and Analysis (MDA) :
(a) How candid and accurate are management's comments?
(b) Does management discuss significant financial trends over the past couple years? (As we've already mentioned, it can be interesting to compare the MD&As over the last few years to see how the message has changed and whether management actually followed through with its plan.)
(c)How clear are management's comments? If executives try to confuse you with big words and jargon, perhaps they have something to hide.
(d)Do they mention potential risks or uncertainties moving forward?
Past Performance
Insider Sales -- A situation where the majority of the wealth of the management is in stocks and if they are liquidating their position in the market , although the media potrays a different story
7.Corporate Governance
Stakeholders and Shareholders
8.Auditor's Report
9.Notes to Accounts
10. Income Statement Analysis
11.Balance Sheet Analysis
THE MOST ESSENTIAL THINGS : MODELS/METHODS TO UNDERSTAND THE ENTERPRISE VALUE OF A COMPANY
12.FCF
13.DCF , Multiples , Proxy or EVA
14.Dividend Models and Self-Sustainable Growth Model (basically means how much can a company grow using its retained earnings)
15.Conclusion
Cheers
1.Economic Analysis
2.Industry Analysis :
(a) Customers (companies will always disclose in their 10-K if any one customer accounts for a majority of revenues)
(b)Market Share among firms (Market share is important because of economies of scale. When the firm is bigger than the rest of its rivals, it is in a better position to absorb the high fixed costs of a capital-intensive industry)
(c)Growth : Increase in customers
(d)Competition : Porter's Five and Price Analysis
(e)Regulation : Risk and Return
(f )Business Cycle : 4 phases
3.Business Model of the Company (10k report) and (10q report
4.Drivers for Future Growth of a Company
5.Competitive Advantage (Porter's Views)
sustainable competitive advantage gained by:
A unique competitive position
Clear tradeoffs and choices vis--vis competitors
Activities tailored to the company's strategy
A high degree of fit across activities (it is the activity system, not the parts, that ensure sustainability)
A high degree of operational effectiveness
6.Management Analysis
Management Discussion and Analysis (MDA) :
(a) How candid and accurate are management's comments?
(b) Does management discuss significant financial trends over the past couple years? (As we've already mentioned, it can be interesting to compare the MD&As over the last few years to see how the message has changed and whether management actually followed through with its plan.)
(c)How clear are management's comments? If executives try to confuse you with big words and jargon, perhaps they have something to hide.
(d)Do they mention potential risks or uncertainties moving forward?
Past Performance
Insider Sales -- A situation where the majority of the wealth of the management is in stocks and if they are liquidating their position in the market , although the media potrays a different story
7.Corporate Governance
Stakeholders and Shareholders
8.Auditor's Report
9.Notes to Accounts
10. Income Statement Analysis
11.Balance Sheet Analysis
THE MOST ESSENTIAL THINGS : MODELS/METHODS TO UNDERSTAND THE ENTERPRISE VALUE OF A COMPANY
12.FCF
13.DCF , Multiples , Proxy or EVA
14.Dividend Models and Self-Sustainable Growth Model (basically means how much can a company grow using its retained earnings)
15.Conclusion
Cheers
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