FINANCIALMODELINGBIS Flashcards
Discontinued operations definition :
disposal of business unit that represents a strategic shift that has, or will have, a major effect on the company’s financial results
Segregating discontinued operations from continuing operations…
helps analysts to better isolate the core reoccuring profit and cash flow of the business
The 2 important margins are :
Gross Margin Profit
Operating expense margin
Gross margin profit =
Gross profit / sales
Operating expense margins =
operating expense / sales
Common size balance sheet definition :
expresses the balance sheet in % terms
Objectives of the common size balance sheet ?
- compare a company across two or more years
- compare two or more companies, adjusts for size and currency differences
- compare a company to industry or other benchmark
3 other information sources :
- equity analyst reports
- credit reports
- data services
Equity analyst reports
sell-side analysts provide clients with :
- objective analysis of company activities
- forecasts for revenues and EPS
- stock price target
Credit Reports
Credit rating agencies provide :
- objective credit analysis that evaluates a company’s creditworthiness
- credit rating
Data services
a number of companies supply financial statement data in easy-to-download spreadsheet formats.
