58. build financial model done

mba/ch58.org

@@ -38,7 +38,85 @@
 **** sec.gov
 - put in the ticker e.g. "MSFT" for Micrasoft
 - download the 10-K
+  - business of the company
+  - risk factors
+  - legal proceedings
+  - etc
 
 ***** other forms:
   - 8-K is press release
   - S-1 all companies must file which tells you everything you need to know about the company
+
+** basics
+*** rule
+- everything is a % of revenue
+- look for trends in the historical data
+- make assumptions about future
+- cash flow and earnings are effectively the same in the long run
+- debt is only relevant if it's huge
+- balance sheet, cash flow, irrelevant in the long run
+
+*** layering
+1. revenue
+   1. cost of revenue
+   2. gross profit (margin)
+   3. add % of revenue to
+      - cost of revenu
+      - gross profit
+
+2. operating expenses
+   1. research and development
+   2. sales and marketing
+   3. general and administrative
+   4. operating income (same as EBIT)
+   5. add % of revenue to the above
+
+3. below the bottom line
+   1. taxes
+   2. net income
+   3. shares
+   4. diluted shares
+
+4. add YOY
+   - revenue
+   - research and development
+   - sales and marketing
+   - general and administrative
+
+5. on taxes add % of EBIT
+   
+
+*** result
+**** revenue
+- revenue
+  - % YOY
+- cost of revenue
+  - % of revenue
+- gross profit
+  - % of revenue
+
+**** operating expenses
+- research and development
+  - % YOY
+  - % of revenue
+- sales and marketing
+  - % YOY
+  - % of revenue
+- general and administrative
+  - % YOY
+  - % of revenue
+- operating income (same as EBIT)
+  - % of revenue
+
+**** below the line items
+- taxes
+  - % of EBIT
+- net income
+- shares
+- diluted earnings per share
+
+** forecasting
+- add the years you want to the model
+- then add columns for the projecting years with each column name having an 'e' for estimate after the year name.  ie. FY2027e
+- look for patterns
+  - try to determine why revenue grew or contracted