4504c15 - Company Analysis Chapter 15 - Fundamental...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Company Analysis Chapter 15 Fundamental Analysis - Last step in top-down approach is company analysis - Goal: estimate share’s intrinsic value Constant growth version of dividend discount model Value justified by fundamentals Fundamental Analysis - Earnings multiple could also be used P 0 =estimated EPS X justified P/E ratio - Stock is under- (over-) valued if intrinsic value is larger (smaller) than current market price - Focus on earnings and P/E ratio Dividends paid from earnings Close correlation between earnings and stock price changes Accounting Aspects of Earnings - How is EPS derived and what does EPS represent? - Financial statements provide majority of financial information about firms - Analysis implies comparison over time or with other firms in the same industry - Focus on how statements used, not made Basic Financial Statements - Balance Sheet Items listed in order of liquidity or in order of payment Assets Cash vs. non-cash assets o Non-cash assets may be worth more or less than carried on books Depreciation methods for fixed assets Inventory evaluation choices Basic Financial Statements - Balance Sheet Liabilities Fixed claims against the firm Equity Residual Adjusts when the value of assets change Linked to Income Statement Picture at one point in time 7/9/11 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Basic Financial Statements - Income Statement Sales or revenues Product costs Gross profit Period Costs EBIT Interest EBT Taxes Net Income available to owners Dividends Addition to Retained Earnings EPS and DPS The Financial Statements - Earnings per share
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/09/2011 for the course FIN 4504 taught by Professor Banko during the Summer '08 term at University of Florida.

Page1 / 5

4504c15 - Company Analysis Chapter 15 - Fundamental...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online