lecture 1 - overview of fa
DESCRIPTION
Lecture 1 - Overview of FATRANSCRIPT
Overview of financial analysis Industry analysis Strategy analysis Principal financial statements Analysis tools
◦ Comparative analysis◦ Common size analysis◦ Ratio analysis
Valuation
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ProspectiveAnalysis
AccountingAnalysis
BusinessEnvironment &
Strategy Analysis
IndustryAnalysis
StrategyAnalysis
FinancialAnalysis
Cash flow
AnalysisProfitability
Analysis
RiskAnalysis
Cost of Capital Estimate Intrinsic Value 3
Process to generate performance expectations through industry analysis and competitive strategy analysis
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Value chain analysis Porter’s Five Forces
Buyer power Supplier power Rivalry among firms Threat of new entrants Threat of substitutes
Economic attributes framework Demand - Marketing Supply - Financing Manufacturing
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Nature of product or service Degree of integration within value chain Degree of geographical diversification Degree of industry diversification
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Cost leadership: supply same product or service at a lower cost
Differentiation: supply a unique product or service at a cost lower than the price premium customer will pay
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A snapshot of the resources of a firm and the claims on those resources at a specific time.
Assets = Liabilities + Owners’ equity Assessing the quality of the Balance Sheet
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Information about the operating profitability of a firm for a particular time period
Net income = Revenues + Gains - Expenses – Losses
Based on accrual basis Assessing the quality of earnings
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Reports for a period of time the net cash flows from the three principal business activities: operating, investing and financing
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