update

_data/section_11/msft/Stockholders__Equity_Statements.csv

@@ -0,0 +1,21 @@
+Category,2012,2011,2010
+Common stock and paid-in capital,,,
+"Balance, beginning of period",63415,62856,62382
+Common stock issued,1924,2422,2311
+Common stock repurchased,-1714,-3738,-3113
+Stock-based compensation expense,2244,2166,1891
+Stock-based compensation income tax deficiencies,-75,-292,-647
+"Other, net",3,1,32
+"Balance, end of period",65797,63415,62856
+Retained earnings (deficit),,,
+"Balance, beginning of period",-6332,-16681,-22824
+Net income,16978,23150,18760
+Other comprehensive income:,,,
+Net unrealized gains (losses) on derivatives,255,-627,27
+Net unrealized gains (losses) on investments,-390,1054,265
+Translation adjustments and other,-306,381,-206
+Comprehensive income,16537,23958,18846
+Common stock cash dividends,-6721,-5394,-4547
+Common stock repurchased,-2918,-8215,-8156
+"Balance, end of period",566,-6332,-16681
+Total stockholders’ equity,66363,57083,46175

_data/section_11/msft/_t1.csv

@@ -0,0 +1,58 @@
+Category,2012,2011,2010
+Revenue,73723,69943,62484
+Operating expenses:,,,
+Cost of revenue,17530,15577,12395
+Research and development,9811,9043,8714
+Sales and marketing,13857,13940,13214
+General and administrative,4569,4222,4063
+Goodwill impairment,6193,0,0
+Total operating expenses,51960,42782,38386
+Operating income,21763,27161,24098
+Other income,504,910,915
+Income before income taxes,22267,28071,25013
+Provision for income taxes,5289,4921,6253
+Net income,16978,23150,18760
+Earnings per share:,,,
+Basic,2.02,2.73,2.13
+Diluted,2.0,2.69,2.1
+Weighted average shares outstanding:,,,
+Basic,8396,8490,8813
+Diluted,8506,8593,8927
+Cash dividends declared per common share,0.8,0.64,0.52
+Assets,,,
+Current assets:,,,
+Cash and cash equivalents,6938,9610,
+Short-term investments,56102,43162,
+"Total cash, cash equivalents, and short-term investments",63040,52772,
+"Accounts receivable, net",15780,14987,
+Inventories,1137,1372,
+Deferred income taxes,2035,2467,
+Other,3092,3320,
+Total current assets,85084,74918,
+"Property and equipment, net",8269,8162,
+Equity and other investments,9776,10865,
+Goodwill,13452,12581,
+"Intangible assets, net",3170,744,
+Other long-term assets,1520,1434,
+Total assets,121271,108704,
+Liabilities and stockholders’ equity,,,
+Current liabilities:,,,
+Accounts payable,4175,4197,
+Current portion of long-term debt,1231,0,
+Accrued compensation,3875,3575,
+Income taxes,789,580,
+Short-term unearned revenue,18653,15722,
+Securities lending payable,814,1208,
+Other,3151,3492,
+Total current liabilities,32688,28774,
+Long-term debt,10713,11921,
+Long-term unearned revenue,1406,1398,
+Deferred income taxes,1893,1456,
+Other long-term liabilities,8208,8072,
+Total liabilities,54908,51621,
+Commitments and contingencies,,,
+Stockholders’ equity:,,,
+Common stock and paid-in capital,65797,63415,
+Retained earnings (deficit),566,-6332,
+Total stockholders’ equity,66363,57083,
+Total liabilities and stockholders’ equity,121271,108704,

_data/section_11/msft/cash_flows__Updated_.csv

@@ -0,0 +1,43 @@
+Category,2012,2011,2010
+Operations,,,
+Net income,16978,23150,18760
+Adjustments to reconcile net income to net cash from operations:,,,
+Goodwill impairment,6193,0,0
+"Depreciation, amortization, and other",2967,2766,2673
+Stock-based compensation expense,2244,2166,1891
+Net recognized gains on investments and derivatives,-200,-362,-208
+Excess tax benefits from stock-based compensation,-93,-17,-45
+Deferred income taxes,954,2,-220
+Deferral of unearned revenue,36104,31227,29374
+Recognition of unearned revenue,-33347,-28935,-28813
+Changes in operating assets and liabilities:,,,
+Accounts receivable,-1156,-1451,-2238
+Inventories,184,-561,-44
+Other current assets,493,-1259,464
+Other long-term assets,-248,62,-223
+Accounts payable,-31,58,844
+Other current liabilities,410,-1146,451
+Other long-term liabilities,174,1294,1407
+Net cash from operations,31626,26994,24073
+Financing,,,
+"Short-term debt repayments, maturities of 90 days or less, net",0,-186,-991
+"Proceeds from issuance of debt, maturities longer than 90 days",0,6960,4167
+"Repayments of debt, maturities longer than 90 days",0,-814,-2986
+Common stock issued,1913,2422,2311
+Common stock repurchased,-5029,-11555,-11269
+Common stock cash dividends paid,-6385,-5180,-4578
+Excess tax benefits from stock-based compensation,93,17,45
+Other,0,-40,10
+Net cash used in financing,-9408,-8376,-13291
+Investing,,,
+Additions to property and equipment,-2305,-2355,-1977
+"Acquisition of companies, net of cash acquired",-10112,-71,-245
+Purchases of investments,-57250,-35993,-30168
+Maturities of investments,15575,6897,7453
+Sales of investments,29700,15880,15125
+Securities lending payable,-394,1026,-1502
+Net cash used in investing,-24786,-14616,-11314
+Effect of exchange rates on cash and cash equivalents,-104,103,-39
+Net change in cash and cash equivalents,-2672,4105,-571
+"Cash and cash equivalents, beginning of period",9610,5505,6076
+"Cash and cash equivalents, end of period",6938,9610,5505

_share/media/sass/org-media-sass

@@ -1 +1 @@
-Subproject commit 81ab28665924e14c9fabbe78a56bfa8563583d82
+Subproject commit 6105a32ff0b689a73fc05329f960a18ea8bea249

definitions.org

@@ -0,0 +1 @@
+#+title: Definitions

mba-main.org

@@ -8,6 +8,10 @@
 - [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4589926#overview][Udemy MBA course]]
 
 * Table of Contents
+** financial terms, errata, etc
+#+attr_html: :class contents-overview
+- [[./mba/finance_terms.org][Financial Terms]]
+
 ** Section 1 - Launching a new company
 #+attr_html: :class contents-overview
 - [[./mba/ch05.org][Chapter 05. How to Legally Protect Your Company]]
@@ -57,3 +61,7 @@
 ** Section 10 - Due Diligence and Data Sources
 #+attr_html: :class contents-overview
 - [[./mba/ch55.org][Chapter 55. Where to get Information for your Financial Model]]
+
+** Section 11 - Modeling and Valuation
+- [[./mba/ch58.org][Chapter 58. How to Build a Financial Model for a Public Company]]
+- [[./mba/ch59.org][Chapter 59. Read Financials like a book & find patterns in data]]

mba/ch55.org

@@ -6,3 +6,123 @@
 - [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4314666#overview][S10:L55. Where to get Information for your Financial Models]]
 
 * Notes
+1. Question financial data
+2. CFO's and CEO's are the best salespeople in the world
+
+** Oracle income statement
+*** lost money
+bc the entire economy was crashing
+
+*** gained money
+1. revenue growth increased bc they bought companies
+   - sun microsystems
+   - bea
+   - etc
+2. this was not organic growth
+3. organic growth is when you aren't buying companies
+
+** tech model
+- subscribers or license revenues
+- bookings
+  - recognize revenue when you ship the product and they pay you
+  - but a lot of this hasn't been paid yet.
+- operating and gross margin trends
+
+*** tech model bs
+- usually low debt if any
+- cash rich
+- analyze deferred revenue
+
+*** tech model cash flow
+- cash flow is not as relevent
+  - becomes same as revenue
+
+*** valuation
+- in five years is the company going to be more or less relevant
+- use revenue, eps and cash flow multiples
+- look long term
+
+** non tech
+*** valuation
+- dcf: discounted cash flow
+- model it five years out
+- revenue, eps, and cash flow multiples
+
+** growth versus value spectrum
+- growth
+  - invest in companies that grow quickly
+
+- value
+  - general only buy cheap stocks
+  - don't really get tech stocks
+
+** info on publicly traded companies
+- www.sec.gov
+  - 10Q quarterly reports
+
+*** 10-q
+1. financial statemetns
+   - balance sheet
+   - income statement
+   - cashflow statement
+
+2. management discussion & analysis (MD&A)
+   - explanation of financial performance and trends
+   - insights into risks and future expectations
+
+3. market risks
+   - details on economic, legal or industry risks
+
+4. legal proceedings
+   - updates on lawsuits or government investigations
+
+5. internal controls
+   - corporate governance
+   - controls over financial reporting
+
+*** 10-K
+**** basics
+- annual financial report
+- comprehensive audited overview
+
+**** sections
+1. business overview
+   - industry, operations and business model
+   - major products, services and markets
+   - competitive landscape
+2. financial  statements
+   - audited
+   - balance sheet
+     - assets
+     - liabilities
+     - equity
+   - income statement
+     - revenue
+     - expenses
+     - profit/loss
+   - cash flow statement
+     - operating
+     - investing
+     - financing cash flows
+   - statement of shareholders equity
+3. management discussion and analysis (MD&A)
+   - management anaylysis of financial performence
+   - risks, trends, and future outlook
+4. risk factors
+   - poetential threats to company
+     - economic
+     - regulatory
+     - competitive
+5. legal proceedings
+6. corporate governance and executive compensation
+   - details for CEO's and top executives
+   - board of directors and corporate governance policies
+7. market data & shareholder information
+   - stock performance
+   - number of outstanding shares
+
+** recap
+- great quantitative tools
+- target price based on estimates in 5 years
+- look for trends
+- use sec.gov

mba/ch58.org

@@ -0,0 +1,122 @@
+#+title: Section 11 | Lesson 58 - How to Build a Financial Model for a Public Company
+#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/org-media-sass/categories/business.css" />
+#+OPTIONS: H:6
+
+* Links
+- [[./../mba-main.org][TOC | Business]]
+- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4315002#overview][S11:L58 course video]]
+
+* Notes
+- how analysts
+  - assess
+  - get access to information
+- goto sec.gov and find the 10k
+
+** investor relations
+- help you understand their company
+- anybody can talk to microsoft investor relations
+- their job to help you
+- small companies that are publicly traded might outsource it
+- go to web site and find contact info
+
+** model valuation
+*** sources
+- sec.gov
+- investor relations of the company
+
+*** publicly traded companies
+- you have the info and sources
+  - first source is investor relations
+  - e.g. search for 'microsoft investor relations'
+
+**** investor relations website
+- events
+- past earnings releases
+- earnings and financials
+  - download an excel spreadsheet
+
+**** 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

mba/ch59.org

@@ -0,0 +1,219 @@
+#+title: Section 11 | Lesson 59 - read financials and find data patterns
+#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/org-media-sass/categories/business.css" />
+#+OPTIONS: H:6
+
+* Links
+- [[./../mba-main.org][TOC | Business]]
+- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4315028#overview][S11:L59 course video]]
+- file:../_data/section_11/microsoft_valuation.numbers
+- file:../_data/section_11/course_notes.pdf
+
+* Notes
+
+- MS changed from a growth stock to a value stock
+- growth investors loved it
+- bill gates left and the company became a bureacracy
+- dont ever invest in a tech company where the founder is gone
+- they are buying back shares
+
+** forecast revenue
+- forecast each year after the next
+  - not looking at each
+- add assumptions 'why' something will happen
+  - e.g. 2016 Windows 10 is free for the first year, but the second year cost
+  - xbox sales slowing
+    - good because factories are less profitable
+  - the new director was good with clouds and clouds are good for $
+
+*** how to build the model
+- read the 10k
+- go to investors website and read relations stuff
+- last 15 minutes of conference wall street guys ask questions
+- call investor relations directly and ask them
+  - make sure you do your due dilligence
+  - the relations guys will bs you if you don't know your stuff
+- you have the same access as analysts do
+  - reg fd: regulation federal disclosure
+    - government mandatated
+    - everyone has the same access
+      - publish on website
+      - publish on webcasts
+
+** calculate net income
+1. calculate operating expenses
+   \[
+   \text{Operating Expenses} = \text{R&D} + \text{Sales & Marketing} + \text{G&A}
+   \]
+
+2. calculate operating income (EBIT)
+   \[
+   \text{EBIT} = \text{Gross Profit} − \text{Operating Expenses}
+   \]
+
+3. calcuate taxes (assume taxes are 21% of EBIT)
+     \[
+     \text{Taxes}= \text{EBIT} × \text{21%}
+     \]
+
+4. calculate net income
+   \[
+   \text{Net Income} = \text{EBIT} − \text{Taxes}
+   \]
+
+** calculate forecasted fields
+*** Operating Expenses
+   \[
+   \text{Operating Expenses} = \text{R&D} + \text{Sales & Marketing} + \text{G&A}
+   \]
+
+*** Operating Income (EBIT)
+   \[
+   \text{EBIT} = \text{Gross Profit} - \text{Operating Expenses}
+   \]
+
+*** Taxes
+   - Assume taxes are 21% of EBIT
+     \[
+     \text{Taxes} = \text{EBIT} \times 21\%
+     \]
+
+*** Net Income
+   \[
+   \text{Net Income} = \text{EBIT} - \text{Taxes}
+   \]
+
+*** Shares
+
+**** Where We Have the Information
+- When historical data is available, derive share count using net income and diluted EPS:
+   \[
+   \text{Shares} = \frac{\text{Net Income}}{\text{Diluted EPS}}
+   \]
+
+- For forward projections, we reverse this: project shares first, then derive EPS.
+
+**** Assumed Share Growth by Company Type
+
+| Company Type              | Assumed Annual Share Growth      |
+|---------------------------+----------------------------------|
+| High-growth tech          | 5–8%                             |
+| Mid-sized growth firm     | 3–5%                             |
+| Blue chip or cash-stable  | 0–2% or flat/shrinking via buybacks |
+
+**** Core Financial Projection Assumptions
+
+| Element     | Assumption                                                       |
+|-------------+------------------------------------------------------------------|
+| Shares      | Project using a realistic dilution rate (e.g., 3–5%) unless buybacks occur |
+| Net Income  | Calculate as EBIT × (1 - tax rate), based on revenue projections |
+| EPS         | Net Income / Shares                                              |
+
+
+*** EPS
+- For projected years, calculate EPS based on projected net income and projected shares.
+- Maintain a YOY column for EPS to support stock price modeling.
+
+*** Stock Price
+
+- Stock price should be projected based on fundamentals, not simple historical price growth.
+- Use a mix of valuation models (outlined below) to estimate target price.
+- These models are based on earnings, revenue, and comparable multiples.
+
+
+** valuation of stock price
+- create a forecast
+  - got earnings per share
+  - listed assumptions
+
+*** how to make a target price
+- 3 methodologies
+- do all of them and take an average
+- keep it simple
+
+**** methodology 1: price vs earnings per share
+
+***** NOTE: we are calculating STOCK PRICE based on EARNINGS PER SHARE multiplied by YOY GROWTH RATE
+
+***** Understanding "Valuation" - Price/Earnings (P/E) Ratio Methodology
+
+This section of your financial course explains how to estimate the target price of a stock five years into the future using the Price-to-Earnings (P/E) ratio.
+
+***** 1. The Price-to-Earnings (P/E) Ratio
+- The **P/E ratio** is a way to value a stock based on its **earnings per share (EPS)**.
+- It is defined as:
+
+  #+BEGIN_SRC
+  P/E = Stock Price / Earnings Per Share (EPS)
+  #+END_SRC
+
+- Stocks typically trade at a P/E ratio that is close to their **earnings growth rate**:
+  - If a company's **earnings grow at 20% per year**, it will likely have a **P/E ratio of ~20x**.
+  - If earnings **grow at 8% per year**, the stock might trade at **8x EPS**.
+
+***** 2. Forecasting the Target Price (5-Year Estimate)
+- The **target price** in **5 years** is based on the company’s **forecasted EPS** multiplied by a reasonable P/E ratio.
+- In this example:
+  - **MSFT’s EPS is growing at 12% per year**.
+  - The stock should trade at a **P/E of 12x** in 5 years.
+
+***** 3. Using the Provided Table (EPS Forecasts)
+
+| Metric                         | FY19e  | FY20e  |
+|---------------------------------|--------|--------|
+| Diluted Earnings Per Share (EPS) | $3.93  | $4.90  |
+| Year-over-Year EPS Growth       | 12%    | -      |
+
+- **FY19e EPS = $3.93**
+- **FY20e EPS = $4.90**
+- **EPS is growing at 12% per year**.
+
+***** 4. Calculating the Target Price
+- Since the company is growing at **12% per year**, we assume it will trade at **12x earnings** in 5 years.
+- Using the **FY20e EPS of $4.90**:
+
+  #+BEGIN_SRC
+  Target Price = 12 × 4.90 = 59
+  #+END_SRC
+
+***** 5. Comparing Today’s Price to the Target Price
+- **Assume MSFT is trading at $47 today** (when the course was written).
+- **Expected appreciation in 5 years**:
+
+  #+BEGIN_SRC
+  (59 - 47) / 47 = 25% increase
+  #+END_SRC
+
+- Since **MSFT is a mature company**, a **25% increase in 5 years seems reasonable**.
+
+***** Final Takeaways
+✔ The P/E ratio method values stocks based on **earnings growth**.
+✔ Stocks usually trade at a **P/E close to their earnings growth rate**.
+✔ Target price is found by **multiplying the estimated EPS by the assumed P/E ratio**.
+✔ **MSFT, trading at $47 today, could reach $59 in 5 years with 12% EPS growth.**
+
+🚀 Now you understand how the course uses P/E ratios for stock valuation!
+
+
+
+**** methodology 2: price vs revenue/sales
+- assume the avg software company trades at 5x revenue in 5 years
+- MSFT, being a big company that grows slowly, grows at 70% of avg
+  - so instead of trading 5x in 5 years, it will trade at 3x in 5 years
+- therefore the [[file:finance_terms.org::*Market Capitalization (Market Cap)][market cap]] should be $504bn in 5 years
+  - market cap is $372 today, so this means 35% upside
+
+    |         | FY19e    | FY20e       |
+    |---------+----------+-------------|
+    | revenue | $128,530 | $143,953    |
+    |---------+----------+-------------|
+    |         |          | $503,835.69 |
+    |         |          | 36%         |
+
+    ok, first thing is first.  he claims the following
+
+1. market cap is 372b today
+2a. a company would normally be trading at 5x in 5 years
+2b. in this case it will be 3x in 5 years bc it is a large company
+3a.
+
+|-|FY12|FY13|FY14|FY15e|FYo

mba/finance_terms.org

@@ -0,0 +1,39 @@
+#+title: Definitions
+
+#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/org-media-sass/categories/business.css" />
+#+OPTIONS: H:6
+
+* Links
+- [[./../mba-main.org][TOC | Business]]
+
+* Notes
+
+** Market Capitalization (Market Cap)
+
+Market capitalization (market cap) refers to the total value of a company's outstanding shares of stock. It is used as a measure of a company’s size and worth in the stock market.
+
+*** Formula:
+#+BEGIN_SRC
+Market Cap = Stock Price × Total Outstanding Shares
+#+END_SRC
+
+*** Example:
+If a company has 10 million shares and each share is worth $50, the market cap would be:
+
+#+BEGIN_SRC
+10,000,000 × 50 = 500,000,000
+#+END_SRC
+
+So, the company's market cap is **$500 million**.
+
+*** Market Cap Categories:
+- *Small-cap:* Less than **$2 billion** (e.g., early-stage or high-growth companies)
+- *Mid-cap:* Between **$2 billion - $10 billion** (e.g., growing businesses)
+- *Large-cap:* Over **$10 billion** (e.g., well-established companies like Apple, Microsoft)
+
+*** Why is Market Cap Important?
+- **Indicates company size** – Larger companies tend to be more stable, while smaller ones might have higher growth potential.
+- **Affects investment decisions** – Large-cap stocks are often safer but may grow slower, while small-cap stocks can be more volatile but have higher growth potential.
+- **Used in stock indices** – Major indices like the **S&P 500** are weighted by market cap.
+
+This structured format is now **ready for Org-mode** and easy to read or export! 🚀