added info from chat

mba/ch50.org

@@ -10,15 +10,15 @@
 * Notes
 
 ** Financial Table
-| Year                              | 2015      | 2016       | 2017        |
+| Year                              | 2015      | 2016       | 2017        | 2018        |
-|-----------------------------------+-----------+------------+-------------|
+|-----------------------------------+-----------+------------+-------------+-------------|
-| Revenue                           | 2,000,000 | 20,000,000 | 350,000,000 |
+| Revenue                           | 2,000,000 | 20,000,000 | 350,000,000 | 661,500,000 |
-| COGS (Cost of Goods Sold)         | 1,800,000 | 16,000,000 | 175,000,000 |
+| COGS (Cost of Goods Sold)         | 1,800,000 | 16,000,000 | 175,000,000 | 264,600,000 |
-| Gross Profit                      | 200,000   | 4,000,000  | 175,000,000 |
+| Gross Profit                      | 200,000   | 4,000,000  | 175,000,000 | 396,900,000 |
-| Gross Margin %                    | 10%       | 20%        | 50%         |
+| Gross Margin %                    | 10%       | 20%        | 50%         | 60%         |
-|-----------------------------------+-----------+------------+-------------|
+|-----------------------------------+-----------+------------+-------------+-------------|
-| *Gross Profit = Revenue - COGS*   |           |            |             |
+| *Gross Profit = Revenue - COGS*   |           |            |             |             |
-| *GM pct = Gross Profit / Revenue* |           |            |             |
+| *GM pct = Gross Profit / Revenue* |           |            |             |             |
 
 
 ** Financial Table: Operating Expenses
@@ -52,8 +52,51 @@ these can also be found in every company
    - security and exchange commision requires all publicly traded companies to put this up
 2. from the initial point we make assumptions
 
-** every ting is based on percentage of sales
+** Operating Profit (EBIT)
-- stock market is paying 10x revenue
+- the company is breaking even when Total Operating Expenses equals or exceeds Gross Profit
-- paying 10x eps for 'value investors'
+- In the example, this occurs in year 2017
-- assume an IPO in 5 years
+
-- GARP (growwth at a reasonable price)
+\[ \text{Operating Profit (EBIT)} = \text{Gross Profit} - \text{Operating Expenses Total} \]
+
+*** Key Components of EBIT
+1. *Revenue*: Total income from sales or services.
+2. *COGS (Cost of Goods Sold)*: The direct costs of producing the goods or services sold by the company.
+3. *Gross Profit*: Revenue minus COGS.
+4. *Operating Expenses*: Costs not directly tied to production, such as:
+   - Sales & Marketing
+   - General & Administrative (G&A)
+   - Research & Development (R&D)
+
+*** Why EBIT Is Important
+1. *Operational Focus*: EBIT shows how efficiently a company runs its operations without considering external factors like financing (interest) or tax obligations.
+2. *Comparison*: Useful for comparing companies in the same industry, as it ignores the effects of different tax rates and financing structures.
+3. *Profitability Analysis*: Highlights whether the core business is profitable.
+
+** What is YOY?
+*** Definition
+YOY stands for *Year-over-Year*. It is a method of comparing data from one period (usually a year) to the same period in the previous year. YOY is often used in business, finance, and economics to evaluate *growth*, *performance*, or *trends* over time.
+
+*** Formula
+\[ \text{YOY % Change} = \frac{\text{Current Year Value} - \text{Previous Year Value}}{\text{Previous Year Value}} \times 100 \]
+
+*** Why YOY Is Important
+1. *Growth Analysis*: YOY highlights whether a metric (like revenue, profit, or expenses) is increasing or decreasing compared to the previous year.
+2. *Seasonal Neutrality*: YOY comparisons help account for seasonality, as the same time periods are compared.
+3. *Trend Insights*: Helps identify long-term trends and patterns by consistently comparing yearly changes.
+
+*** Example
+Calculate YOY for *Revenue*:
+
+| Year | Revenue (₪)       | YOY % Change                                   |
+|------|-------------------|-----------------------------------------------|
+| 2016 | ₪20,000,000.00    | \((20,000,000 - 2,000,000) / 2,000,000 \times 100 = 900\%\) |
+| 2017 | ₪350,000,000.00   | \((350,000,000 - 20,000,000) / 20,000,000 \times 100 = 1650\%\) |
+| 2018 | ₪661,500,000.00   | \((661,500,000 - 350,000,000) / 350,000,000 \times 100 = 89\%\) |
+| 2019 | ₪999,600,000.00   | \((999,600,000 - 661,500,000) / 661,500,000 \times 100 = 51\%\) |
+| 2020 | ₪1,399,440,000.00 | \((1,399,440,000 - 999,600,000) / 999,600,000 \times 100 = 40\%\) |
+
+*** Uses of YOY
+1. *Revenue Growth*: Are sales increasing year over year?
+2. *Expense Management*: Are costs growing faster than revenue?
+3. *Profitability Trends*: Is the business becoming more or less profitable over time?
+4. *Operational Insights*: Are marketing or R&D expenses increasing efficiently year over year?