business-haroun/mba/ch55.org

Section 10 | Lesson 55 - Where to get Information for your Financial Models

• Links
• Notes
  • Oracle income statement
    • lost money
    • gained money
  • tech model
    • tech model bs
    • tech model cash flow
    • valuation
  • non tech
    • valuation
  • growth versus value spectrum
  • info on publicly traded companies
    • 10-q
    • 10-K
      • basics
      • sections
  • recap

Links

• TOC | Business
• 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