Overview What not to do Where to find the right information How to interpret the data.
Jan 21, 2016
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OverviewWhat not to do
Where to find the right information
How to interpret the data
What not to do:Historical Stock Prices
Stock Charts
Historical Trading Volume
Price Multiples
Financial WebsitesYahoo! Finance
Google Finance
MSN Money
MorningStar
S&P NetAdvantage
Yahoo vs. Google
Key Statistics Financial Highlights
Financials Income Statement Balance Sheet Cash Flow
Financial Statements 5 most recent Quart
ers 4 most recent Years
All Financial Data is from Reuters
Recent News
MSN MoneyMSN Key Ratio Reports
MSN > MSN Money > Ticker Symbol > Print Report > Key Ratios
MSN Money Reports
Step #1
Step #2
Example Report
Morningstar
Snapshot Industry Peers Growth Profitability Financial Health
Financial Statements 10 Year Statements
Key Ratios Profitability Growth Rates Cash Flow Financial Health Efficiency Ratios
S&P NetAdvantageFind in the Valley Library Online Databases
Interpreting the Data
Analyzing Financial Statements
Arithmetic Mean vs. Geometric Mean Use Compound Annual Growth Rate (CAGR)
Ways to Analyze Financial Statements Common Size Trend Year over Year CAGR
4 Key Areas to Look atProfitability
Gross Margin, Net Profit Margin
Growth Sales, Net Income, Dividends
Financial Health D/E Ratio, Current Ratio, Int. Coverage
Return on Investments ROE, ROA, ROIC
RatiosROE Example:
Apple has a ROE of 27.9% - Is that good or bad?Neither. All ratios are relatives.
Correct Statement:“Apple has a ROE of 27.9% which is 8 percentage points
less than the industry average.”
RatiosGross Margin Example:
Apple has a Gross Margin of 34.1%- Is that good or bad?Neither. All ratios are relatives.
Correct Statement:“Apple has a Gross Margin of 34.1% which is 306 bases
points higher than the industry average.”
Interpret the Data“Apple has a Gross Margin of 34.1% which is 306
bases points higher than the industry average.”
“Apple has a ROE of 27.9% which is 8 percentage points less than the industry average.”
Any financial data provided, should be accompanied by a statement that answers:
What does this mean?
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