Financial statement analysis and
valuation. Module 1 to 5.
BRIAN PETER
, 1
4 steps in Fin Stmt Analysis and Valuation – CORRECT ANSWER
1. business environment and accounting information (competitive analysis)
2.Adjusting and Assessing Fin information (profitability analysis)
3. Forecasting Fin. Numbers
4. Company Valuation (worth of a company is the CV of expected payoff)"
"5 competitive Forces - CORRECT ANSWER 1. Industry Comp. - increase cost of
doing business
2.Buyer power - risk if customer has strong price concessions. reduces profits and cash
flow
3.supplier power - risk if supplier has strong bargaining power and can demand high
prices. adverse effect on profits
4.threat of substitution - occurs when a company has limitation on products. downward
pressure on profit
5.threat of entry - when new market entrants increases competition."
"Smith Group - High Quality Earnings should be - CORRECT ANSWER Truthful &
Sustainable"
"Earning to Stock Price - CORRECT ANSWER - Current period earnings predict future
earnings;
- Expected future earnings determines the firms expected future dividends payout
-these future dividends, when discounted, determine current stock price"
"Return on Equity (ROE) - CORRECT ANSWER NI/Avg Stockholder Equity
-principal summary measure of company performance.
-quality earnings come from the operating activities"
"Return on Net Operating Assets (RNOA) - CORRECT ANSWER NOPAT/Avg NOA
-RNOA/ROE = % of ROE operating"
"Net Operating Profit Margin (NOPM) - CORRECT ANSWER NOPAT/REV
valuation. Module 1 to 5.
BRIAN PETER
, 1
4 steps in Fin Stmt Analysis and Valuation – CORRECT ANSWER
1. business environment and accounting information (competitive analysis)
2.Adjusting and Assessing Fin information (profitability analysis)
3. Forecasting Fin. Numbers
4. Company Valuation (worth of a company is the CV of expected payoff)"
"5 competitive Forces - CORRECT ANSWER 1. Industry Comp. - increase cost of
doing business
2.Buyer power - risk if customer has strong price concessions. reduces profits and cash
flow
3.supplier power - risk if supplier has strong bargaining power and can demand high
prices. adverse effect on profits
4.threat of substitution - occurs when a company has limitation on products. downward
pressure on profit
5.threat of entry - when new market entrants increases competition."
"Smith Group - High Quality Earnings should be - CORRECT ANSWER Truthful &
Sustainable"
"Earning to Stock Price - CORRECT ANSWER - Current period earnings predict future
earnings;
- Expected future earnings determines the firms expected future dividends payout
-these future dividends, when discounted, determine current stock price"
"Return on Equity (ROE) - CORRECT ANSWER NI/Avg Stockholder Equity
-principal summary measure of company performance.
-quality earnings come from the operating activities"
"Return on Net Operating Assets (RNOA) - CORRECT ANSWER NOPAT/Avg NOA
-RNOA/ROE = % of ROE operating"
"Net Operating Profit Margin (NOPM) - CORRECT ANSWER NOPAT/REV
