#+title: Section 11 | Lesson 58 - How to Build a Financial Model for a Public Company
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* 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