Chapter_15 - Chapter 15 Full-Information Forecasting...

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Unformatted text preview: Chapter 15 Full-Information Forecasting, Valuation, and Business Strategy Analysis Full-Information Forecasting, Full-Information Forecasting, Valuation, and Business Strategy Valuation, and Business Strategy Analysis Analysis Chapter 14 developed simple forecasting schemes based solely on information in financial statements Link to Previous Chapter This chapter uses the financial statement analysis of Chapter 11 and 12 to develop a scheme for full- information forecasting This chapter shows how information outside the financial statements is utilized to make forecasts that improve upon the simple forecasts in Chapter 14 This Chapter Chapter 16 begins an investigation of accounting issues that arise from forecasting and valuation Link to Next Chapter Develop forecasting and valuation spreadsheets with BYOAP Link to Web Page How is knowledge of the business applied to forecasting ? How is financial statement analysis utilized in forecasting ? How are proforma future financial statements prepared ? How is pro forma analysis used in strategy decisions ? Chapters 11 and 12 laid out the analysis of financial statements that uncovers drivers of profitability and growth. Link to Chapter 10 What you will learn from this What you will learn from this chapter chapter • What types of economic factors have to be considered for forecasting • How financial statement drivers translate economic factors into valuation • How particular drivers typically change over time • How to do pro forma analysis • The 15 steps involved in forecasting residual operating income and abnormal operating income growth • How to convert pro forma financial statements to a valuation • How pro forma analysis is used as a tool in strategy analysis • The difference between dollar forecasting and per- share forecasting • How mergers and acquisitions are evaluated A Reminder: A Reminder: The Steps of Fundamental Analysis The Steps of Fundamental Analysis Knowing the Business · The Products · The Knowledge Base · The Competition · The Regulatory Constraints Strategy Analyzing Information · In Financial Statements · Outside of Financial Statements Forecasting Payoffs · Measuring Value Added · Forecasting Value Added Convert Forecasts to a Valuation Trading on the Valuation Outside Investor Compare Value with Price to BUY, SELL or HOLD Inside Investor Compare Value with Cost to ACCEPT or REJECT Strategy 1 2 3 4 5 Review of Chapter 1 Review of Chapter 1 Knowing the Business: Knowing the Business: Know the Firm’s Products Know the Firm’s Products • Type of products • Consumer demand for the product • Price elasticity of demand for the product • Substitutes for the product. Is it differentiated? On price? On quality?...
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This note was uploaded on 10/07/2010 for the course ECTCS ec12947322 taught by Professor Johnathayeri during the Spring '10 term at Life.

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Chapter_15 - Chapter 15 Full-Information Forecasting...

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