M2.1. Reviewing the Financial Statements of Kimberley-Clark
Corporation
Introduction
This case runs through the basics of financial statements. It also introduces the student to
Kimberley-Clark (KMB),
Management 126
Winter 2014
Quiz 1
Name: _
Use the DCF method to value a company with the following characteristics. It will be in business for three
years, generating $900 in revenue each year. It wil
Question 5 is the heart of the case and the critical Fortune article on Pre-Paid Legal Services Does the PPLS accounting for sales commissions reflect economic reality?
1
Preview of Question 5.
PPLS
Introduction to Valuation - Valuing a Bond
Consider valuing a 3-year bond with principal equal to $1,000 and $120 interest rate payable at the end of each year. Thus the coupon rate is 12 percent. Als
M5.2 Analysts Forecasts and Valuation: PepsiCo and Coca-Cola I
This case is a straight-forward application of the valuation techniques in this chapter. A parallel
valuation of the two firms is in Mini
Historical Balance Sheet
$000
Assets
Current Assets
Cash and equivalents
Short term investments
Accounts Receivable - net
Unbilled receivables and retentions
Inventories
Income Taxes Receivable
Deferr
Management 126
Cost of capital exercises
Winchester Inc, has $4 billion in debt with an interest rate of 6%. In addition, the company has $8 billion in
book value of equity, $10 billion in market valu
CHAPTER TWO
Introduction to the Financial Statements
Concept Questions
C2.1. The change in shareholders equity is equal earnings minus net payout to shareholders
only if earnings are comprehensive ear
Exercises
Drill Exercises
E3.1. Calculating a Price from Comparables
P/E for the comparable firm = 100/5 = 20
P/B for the comparable firm = 100/50 = 2
Price for target, from earnings = $2.50 20 = $50
CHAPTER FOUR
Cash Accounting, Accrual Accounting, and Discounted Cash Flow Valuation
Concept Questions
C4.1. The first sentence is true: dividends are the payoff to equity investing. The second senten
CHAPTER FIVE
Accrual Accounting and Valuation: Pricing Book Values
Concept Questions
C5.1. True. A firm with positive expected residual earnings (produced by an ROCE above the
cost of capital) must be
M3.2. Nifty Stocks? Returns to Stock Screening
Introduction
This case is self-guiding case. It was written in October 1999 with no idea of the outcome, but
with a good guess: those who forget the less
M1.1 Critique of an Equity Analysis: America Online, Inc.
Introduction
This case can be used to outline how the analyst goes about a valuation and, specifically,
to introduce pro forma analysis. It ca
Management 126
Cost of capital exercises
Solution
1) Calculate the debt cost of capital.
Interest rate x (1 tax rate) = 6% x (1-40%) = 3.6%.
2) Calculate the equity cost of capital based on the CAPM m
Management 126
Inter-corporate investments
Solution
1) Derive the debt cost of capital and abnormal earnings (equity basis) under each of the following treatments
of the investments.
a) Treat the inve
Course Syllabus
Management 126: Financial Statement Analysis
Fall 2017
Dr. Michael Williams
Office: Anderson School D-419
E-mail: [email protected]
Office Hours: Tuesday 3:00 6:00
Course Obje
Session 1:
Introduction to FSA
Mgmt 126: Financial Statement Analysis
Dr. Michael Williams
1
Instructor background
PhDs in economics and accounting
20 years teaching at UCLA, Yale, University of Ore
FINANCIAL STATEMENT ANALYYSIS
OBAGI CASE
Data:
Obagis annual report for 2007 is available on the course website.
Assumptions:
Net sales grow 15% in 2008, 10% in 2009, and 5% in 2010, 2011, and 2012 an
Session 16:
Earnings Quality
Mgmt 126: Financial Statement Analysis
Professor Michael Williams, UCLA Anderson
Earnings quality
This is a commonly used, but
amorphous term.
The idea is that a strong ea
Session 5A:
Residual Income Model
Mgmt 126: Financial Statement Analysis
Professor Michael Williams, UCLA Anderson
TOPICS
Valuation Formulation
Present Value of Expected Future Dividends
Clean Surplu
Management 126
FSA Case
The case involves the analysis of a single company of your choosing. Four or five people may work
together on the project. Do not try to work on the project alone without talki
Management 126
Ratio information
General ratio information
What is a ratio?
A ratio is one variable divided by another. In financial analysis, at least one of the variables in the
ratio must come from
Management 126
Practice Quiz 2 (given Winter 2014)
Consult the 2012 financial statements for Loreal available on the class website (specifically use statements 4.1,
4.3, and 4.5).
1) Calculate the DSI
Management 126
Practice Quiz 2 Solution
1) If Im concerned about a build-up in Microsofts receivables in 2012, which ratio should I calculate?
Days sales outstanding (DSO)
Calculate this ratio for 201