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Overview What not to do Where to find the right information How to interpret the data.

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Presentation on theme: "Overview What not to do Where to find the right information How to interpret the data."— Presentation transcript:

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2 Overview What not to do Where to find the right information How to interpret the data

3 What not to do: Historical Stock Prices Stock Charts Historical Trading Volume Price Multiples

4 Financial Websites Yahoo! Finance Google Finance MSN Money MorningStar S&P NetAdvantage

5 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 Reuters Recent News

6 MSN Money MSN Key Ratio Reports MSN > MSN Money > Ticker Symbol > Print Report > Key Ratios

7 MSN Money Reports Step #1 Step #2 Example Report

8 Morningstar Snapshot Industry Peers Growth Profitability Financial Health Financial Statements 10 Year Statements Key Ratios Profitability Growth Rates Cash Flow Financial Health Efficiency Ratios

9 S&P NetAdvantage Find in the Valley Library Online Databases

10 Interpreting the Data

11 Analyzing Financial Statements Arithmetic Mean vs. Geometric Mean Use Compound Annual Growth Rate (CAGR) Ways to Analyze Financial Statements Common Size Trend Year over Year CAGR

12 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

13 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.”

14 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 higher than the industry average.”

15 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?


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