Overview
 What not to do
 Where to find the right information
 How to interpret the data
What not to do:
 Historical Stock Prices
 Stock Charts
 Historical Trading Volume
 Price Multiples
Financial Websites
 Yahoo! Finance
 Google Finance
 MSN Money
 MorningStar
 S&P NetAdvantage
Yahoo vs. Google
 Key Statistics
 Financial Highlights
 Financials
 Income Statement
 Balance Sheet
 Cash Flow
 Financial Statements
 5 most recent Quarters
 4 most recent Years
 All Financial Data is from
Reuters
 Recent News
MSN Money
 MSN Key Ratio Reports
MSN > MSN Money > Ticker Symbol > Print Report > Key Ratios
MSN Money Reports
Step #2
Example Report
Step #1
Morningstar
 Snapshot
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Industry Peers
Growth
Profitability
Financial Health
 Financial Statements
 10 Year Statements
 Key Ratios
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Profitability
Growth Rates
Cash Flow
Financial Health
Efficiency Ratios
S&P NetAdvantage
 Find in the Valley Library Online Databases
Interpreting the Data
Analyzing Financial Statements
 Arithmetic Mean vs. Geometric Mean
 Use Compound Annual Growth Rate (CAGR)
 Ways to Analyze Financial Statements
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Common Size
Trend
Year over Year
CAGR
4 Key Areas to Look at
 Profitability
 Gross Margin, Net Profit Margin
 Growth
 Sales, Net Income, Dividends
 Financial Health
 D/E Ratio, Current Ratio, Int. Coverage
 Return on Investments
 ROE, ROA, ROIC
Ratios
ROE Example:
Apple has a ROE of 27.9% - Is that good or bad?
Neither. All ratios are relatives.
Correct Statement:
“Apple has a ROE of 27.9% which is 8 percentage points less than the
industry average.”
Ratios
Gross Margin Example:
Apple has a Gross Margin of 34.1%- Is that good or bad?
Neither. All ratios are relatives.
Correct Statement:
“Apple has a Gross Margin of 34.1% which is 306 bases points
than the industry average.”
higher
Interpret the Data
 “Apple has a Gross Margin of 34.1% which is 306 bases
points higher than the industry average.”
 “Apple has a ROE of 27.9% which is 8 percentage points
less than the industry average.”
Any financial data provided, should be accompanied by a
statement that answers:
What does this mean?