2. Performance Analysis Are you feeling Lost? Begin your performance analysis by developing a strategy. What issues are important to you? Profitability? Solvency? Share Value? Dividends? Asset Utilization? Social Responsibility, Other?

3. Checklist to begin Select an industry Prepare an overview of the industry Select a Target Select a Benchmark Get Annual Reports on both companies Summarize stock price history Collect current news on both companies

4. Organize your data 1) Profit, Equity, & Share Value mgt. 2) Debt mgt. 3) Cash mgt. 4) Asset mgt. 5) Relationship mgt. 6) Positioning

5. Your Investigation Begins… Follow the nightly news Read the Wall Street Journal and other important business newspapers Read the NY Times Search online

6. This is the Surveillance Stage 1. Enter two years of financial data for the target company 2. Review the results & make notes 3. Perform the same procedure for the Benchmark 4. Compare Target to Benchmark & note results 5. Read all Footnotes 6. Look for inconsistencies (e.g. increases in profits and decreases in cash type (liquid) accounts) 7. Check current news. Look for qualitative performance issues such as ethical behavior, good/bad relationships, and positioning for the future

7. Profit, Equity, and Share Value management 1.01) Income to Revenue 1.02) Margin 1.03) Operating Efficiency 1.04) Tax/Pretax Earnings 1.05) ROE 1.06) Paid-in/Total Capital 1.07) Earned/Total Capital 1.08) % Capital in Change 1.09) Basic EPS 1.10) Diluted EPS

8. Profit, Equity, and Share Value management 1.11) Share Price 1.12) Price/Earnings 1.13) Diluted EPS/Basic 1.14) Book Value/Share 1.15) Book Value/Market 1.16) Dividends 1.17) Dividend Payout 1.18) Dividend Yield 1.19) Invest Productivity 1.20) Time to Payback 1.21) Price Potential 1.22) Beta

9. Debt management Part One: 2.23) Current Debt/Total Debt 2.24) Non-Debt/Total Debt 2.25) Total Debt/Total Assets 2.26) Current Assets/Total Assets 2.27) Non-Current Assets/Tot al Assets Part Two: 2.28) Times Interest Earned 2.29) Current Cash Coverage 2.30) A/P turnover 2.31) Av. Payment Period 2.32) Total Debt / Equity

10. Cash management 3.33) Working Capital 3.34) Working Capital/Revenue 3.35) Current Ratio 3.36) Quick Ratio 3.37) Operating Cash Flow/Sales 3.38) Cash Emphasis

11. Asset management Asset management (Effective use of company assets) 4.39) Sales/Total Assets 4.40) Net Inc/Total Assets 4.41) A/R turnover 4.42) Average Collect 4.43) Inventory turnover 4.44) Age of Inventory

12. Relationship/Ethical issues 5.29) Employee Relations 5.30) Customer Relations 5.31) Competitor Relations 5.32) Director Relations 5.33) Government Relations 5.34) Environmental record 5.35) Sensitivity: Good/Bad Citizenship & community sensitivity 5.36) Stockholder Relations 5.37) Communication 5.38) Public Persona 5.39) Vendor Relations

13. Strategic Positioning 6.40) Vision & Mission 6.41) Competitive Advantage 6.42) Environment: External 6.43) Environment: Internal 6.44) Expansion: Plans and Progress