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Fundamental Analysis Final

Fundamental Analysis Final - Business Valuation Fundamental...

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Business Valuation: Fundamental Analysis Spring, 2010 Instructor: John M. Longo, PhD, CFA
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Fundamental Analysis Analysis of a company’s prospects based on the following: Financial statement analysis Ratio analysis Strategic and management analysis “Scuttlebutt” or legwork (talk to competitors, suppliers, employees, etc). Financial modeling with a particular focus on: Sales growth Profit margins Earnings (or EBITDA) Valuation
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Characteristics of a Great Fundamental Analyst / Fund Manager According to Steven Einhorn, Vice Chairman of hedge fund Omega Advisors, and former Head of Research at Goldman Sachs, a great analyst / fund manager exhibits the characteristics that start on the next slide.
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Characteristics of a Great Fundamental Analyst / Fund Manager Passionate Thorough and penetrating analysis Comparative advantage Competitive Conviction Risk taking Teamwork / leverage your peers
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Characteristics of a Great Fundamental Analyst / Fund Manager (Continued) Unbiased / admit mistakes Skeptical Creative Bold / edgy Curious Service Tenacious Excellent communication skills
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Q: Where Do We Start? A: With the financial statements of the firm. Balance Sheet Snapshot of the firm’s financials. Income Statement Measures earnings power over the course of time. Cash Flow Measures cash in / out of business – cash is king!
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More On Financial Statement Analysis Analogy Doctor : Vital signs to assess patient health. Analyst: Financial statements, ratios, and trends to assess firm health. Financial statements and Accounting are the language of business. Ratio analysis helps identify trends and assess a firm relative to its competitors.
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Key Company Related Documents 10-K (Annual Report) 20-F (Annual Report for foreign firms) 10-Q (Quarterly Report –
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