COMPANY ANALYSIS
FIN 3403, 3404
PROF DIGGLE
WHAT IS THE POINT OF THIS
EXERCISE?

TEAMWORK
GROUP
ANALYSIS WILL BE
MADE

 PEER

USING REAL
WORLD
FINANCIAL
STATEMENTS


FINANCIAL
FORECASTING
BASICS
INTERPRETING
REAL WORLD
RATIOS
BENCHMARKING
GETTING STARTED





SEE YOUR LECTURE NOTES pp. 5-7 FOR
DETAILS AND A CHECKLIST
REFER TO EXCEL DISK FOR MORE DETAIL
ON POWERPOINT PRESENTATION
ASSIGN TASKS TO EACH TEAM MEMBER
USING DATA YOU HAVE GATHERED,
ENTER AS MUCH AS POSSIBLE ON DISK
SEE INSTRUCTOR
ORGANIZE
YOUR TEAM

Set a time for team to meet that is
convenient for all. I recommend your team
meet weekly. Each member should report
on progress
 WRITE OR CALL COMPANY. ASK FOR:
5
years of annual reports and/or 10K
 Latest proxy
 10Qs since last 10K
 Recent press releases
USING INTERNET SOURCES
Find out the TICKER of your company
 Look on course home page
 Click on Internet home pages for financial
data, price information and current news on
your company.
 Download relevant material so you have a
hard copy to show instructor

SEE INSTRUCTOR
I will assist you in interpreting output
 I need the following:

 Copy
of your disk
 Hard copy printout
 Copy of annual or 10K
 Data on your company, the industry
environment, and selected competitors. I will
help you pick benchmarking companies.
THE EXCEL SPREADSHEET

COPY THE DISK I
GIVE EACH TEAM.
MAKE MULTIPLE
COPIES AND RETURN
ORIGINAL TO
INSTRUCTOR.

Enter data in the
YELLOW CELLS in
your Excel
spreadsheet.



Use the last 10K 5
year summary page
for historical data that
is “Pro-forma.”
SHOW ME OUTPUT
DO NOT ENTER
DATA IN ANY CELL
EXCEPT YELLOW
CELLS!!
CHECKLIST ON EXCEL DISK
FIN 3404
FIN 3403
 More advanced ratio
 Complete ratio
analysis
analysis
 Complete EPS
 Industry overview and
forecast(Fin 3403
brief history
students can do this
 Check recent news and
for
extra
credit)
chart of stock
 Stock Valuation
 Prepare 15 MIN
 Benchmarking
Powerpoint
presentation/handouts  20 MIN PPT
Presentation/ handouts
ENTERING DATA IN EXCEL
SPREADSHEET
Use most recent financial reports. Start
with last year and work back,
 Get price data, P/E, and LTM E.P.S. from
recent Wall Street Journal
 See instructor with questions. Give yourself
plenty of time to assemble data on
company, the industry and the competiton.

CHECK YOUR DATA



SPREADSHEET HAS
DIAGNOSTICS TO
GUIDE YOU.
DO RATIOS MAKE
SENSE?
ARE REVENUE
AND EXPENSE
ITEMS GROWING
AT CONSISTENT
RATES?
IMPORTANT CONCEPTS



ALWAYS EXCLUDE
EXTRAORDINARY
ITEMS.
BE SURE DATA IS
CONSISTENT (PROFORMA)
ADJUST FOR ANY
RECENT SPLITS OR
STOCK DIVIDENDS


READ THE CEO
LETTER. WHAT IS
HIS STRATEGY?
DID HE DO WHAT
HE PROMISED IN
OLDER ANNUAL
REPORT LETTERS?
IS THE AUDIT
UNQUALIFIED?
TIPS IN USING 10K
10K=ANNUAL, 10Q = QUARTERLY



IF LT DEBT INTEREST
IS NOT BROKEN OUT
IN FOOTNOTES, USE
TOTAL INTEREST
R&D OR CAPITAL
SPENDING IS
USUALLY FOUND IN
CASH FLOW STMT.
LOOK ON THE INTERNET AND ON LEXISNEXIS FOR NEWS AND
RESEARCH.




TRY AND FIND
MACRO-GROWTH OF
EACH SEGMENT OF
SALES.
E.P.S. GROWTH
SHOULD BE => SALES
GROWTH. P/E IS TIED
TO GROWTH.
READ FOOTNOTES.
R.O.E IS THE MOST
IMPORTANT RATIO.
TREND ANALYSIS


LOOK AT SALES
SEGMENTS AND
MARGINS. WHICH
IS GROWING
FASTEST.
USING YOUR
FINANCIAL
CALCULATOR,
CHECK GROWTH
OF SALES AND
EXPENSES.
?
ORGANIZATIONAL TIPS


One team member
should be in charge of
operating the PC and
slides. This person
may also work on
preparing the slides.
Two members should
be responsible for
entering data from
10K



One person should get
current prese releases
and price chart.
Another may assist in
getting industry data.
One team member
should prepare DuPont
Model which is on
your diskette.
COPY ALL FILES
INDUSTRIAL COMPANY
RATIOS (see Lec Notes appendix)

INCOME STMT







GROSS MARGIN
OPERATING MARGIN
PRETAX MGN
NET MGN
INVENTORY
TURNOVER
TOTAL ASSET
TURNOVER
MARKET RATIOS

BALANCE SHEET



CURRENT RATIO
QUICK RATIO (ACID
TEST)
P&L + BAL SHEET
 ROE
 ROA

CAP. STRUCTURE


P/E


PRICE / BOOK (BVPS)

X INTEREST EARNED
LT DEBT / ASSETS
LT DEBT / EQUITY
WHAT IS THE “STORY”?


WHAT ARE YOUR
CONCLUSIONS?
USE RATIO DATA
TO SUPPORT YOUR
CONCLUSIONS.
WOULD YOU
INVEST IN THIS
COMPANY NOW?
WHY OR WHY
NOT?
PRESENTATION SLIDES
SEQUENCE (each company is unique)
1. Brief company recent
history
2. Trend analysis
2. Interpret ratio data
3. DuPont model
4. Benchmarking with
competitors using
Compustat
5. Assumptions in your
forecast
6. Recent news or
events impacting your
company
7. Stock chart and price
trends (THIS MAY
BE DOWNLOADED)
TREND ANALYSIS


SPREADSHEET
LOOKS AT 5 YR
GROWTH
USE FIN
CALCULATOR TO
LOOK AT TREND
LINE GROWTH IN:
 ASSETS
 SALES
 NET
INCOME
 L.T DEBT
 B.V.P.S.

DO A COMPARISON
OF YOUR
COMPANY AND
SEVERAL KEY
COMPETITORS
USING LINE OR
BAR CHARTS
TEAM CLASS PRESENTATION



DEVELOP A SCRIPT
ASSIGN ONE TEAM
MEMBER TO
OPERATE PC
ONE OR MORE
TEAM MEMBERS
CAN DO PARTS OF
THE
PRESENTATION



TIME YOUR
PRESENTATION
PREPARE A
HANDOUT FOR
CLASS
GIVE INSTRUCTOR
CLASS HANDOUT
AND ALL SLIDES +
SPREADSHEET &
10k --PUT IN A FOLDER
JUST DO IT!



DRESS
PROFESSIONALLY.
WATCH YOUR
TIME.
ENCOURAGE
QUESTIONS AND
DISCUSSION
AFTER FORMAL
REMARKS.
USING POWERPOINT

ICONS AT BOTTOM
OF SCREEN
 SLIDE
EDIT VIEW
 OUTLINE
 SLIDE SORTER (you
can move slides
around)
 SCRIPT
 FULL VIEW --USE
FOR PRESENTATION



PPT IS EASY AND
FUN
EXPERIMENT WITH
ICONS AND SOUND
EFFECTS
BE SURE FONTS
ARE LARGE
ENOUGH TO BE
SEEN AT BACK OF
ROOM
USING MS POWERPOINT


Computer labs for
UCF use WINDOWS
NT. Classroom
computer uses this as
well.
Try and save your file
in Windows NT
(1997). Make
multiple copies.


Load your
presentation on the PC
before class on the C
drive.
Be sure and test slides
to be sure everything
works. IF YOU SAVE
DATA IN AN EARLIER
VERSION OF
WINDOWS YOU MAY
HAVE A PROBLEM
SAVE REPORT FOR JOB
INTERVIEWS


MAKE A COPY FOR
EACH TEAM
MEMBER
PUT ON YOUR
RESUME THAT:

 YOU ARE
PROFICIENT IN MS
EXCEL AND
POWERPOINT

DO AN ANALYSIS
OF EACH PUBLIC
INDUSTRIAL
COMPANY THAT
YOU PLAN TO
INTERVIEW WITH
GIVE INTERIEWER
COPY OF ANALYSIS
TEAM PEER EVALUATION
I AM NOT A POLICEMAN. YOUR
TEAM ORGANIZATION IS UP TO YOU.
 I AM INTERESTED IN MAKING SURE
THAT ALL TEAM MEMBERS WORK.
 PLEASE SEE ME WITH ANY
PROBLEMS. DO NOT WAIT UNTIL
END OF THE TERM! SET MEETING
TIMES THAT WORK FOR ALL
MEMBERS.

FIN 3404 COMPANY
ANALYSIS PROJECT
PROF DIGGLE
ADDITIONAL ADVANCED
CONCEPTS
READING THE WSJ


SEE LEC NOTES PP.
43-44
SEC C:
COL-PG 1
FINANCIAL MKTS
 TREASURY BONDS,
NOTES AND BILLS
 AGENCIES
 NYSE STOCK
QUOTES
 NASDAQ

SEC C CONTD
 DOW
JONES
AVERAGES
 CHARTS
 READING A STOCK
QUOTE ON YOUR
COMPANY
 LEFT

SEC B--THE MART
FORECASTING
1.
Determine
segments--I will assist
2. Develop an
estimated growth rate
for each segment sales
3. Develop an
estimated margin for
each segment based on
the corporate wide
margin
4. Spreadsheet will
develop a forecast.
You should know what
E.P.S. were for the
past year. Adjust your
growth rates to
coincide
5. Fine tune forecast.
This is a trend line
forecast only.
VALUATION



Complete Dividend
Discount Model (part
of Excel spreadsheet)
Complete DuPont
Model
Chart the stock. You
may be able to
download this. Use a
5 year chart if
possible.



Compare the current
price with DDM
value.
Compare P/E and
Price to BVPS with
historical data and
industry norms.
WOULD YOU BUY
THIS STOCK NOW?