Financial statement analysis and common stock valuation
If you are an investor who values fundamental analysis, you are in the right place. If you need comprehensive financial ratios, read on. You already know that the analysis of financial statements allows you to buy cheap and sell high, now it’s time to put it into practice. Stock Analysis on Net is here for you.
Example company for today:
Microsoft Corp. (NASDAQ:MSFT)
Enterprise Value (EV)
Enterprise value is total company value (the market value of common equity, debt, and preferred equity) minus the value of cash and short-term investments.
Enterprise Value to EBITDA (EV/EBITDA)
To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital.
Income Statement
The income statement (statement of earnings) reports on the performance of Microsoft Corp., the result of its operating activities.
Cash Flow Statement
The cash flow statement provides information about Microsoft Corp. cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on Microsoft Corp. balance sheet.
Long-term Trends
Statement of Comprehensive Income
Comprehensive income is the change in equity (net assets) of Microsoft Corp. during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.
Balance Sheet: Assets
The assets reports major classes and amounts of resources owned or controlled by Microsoft Corp..
Analysis of Reportable Segments
Microsoft Corp. operates in 3 segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
Dividend Discount Model (DDM)
The dividend discount model (DDM) is a technique for estimating the value of a share of Microsoft Corp. common stock issue as the present value of all future dividends.
Common-Size Balance Sheet: Assets
Quarterly Data
Assets components shown as percentage of total assets.
Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Evaluates revenues and output generated by the Microsoft Corp. assets. Operating performance ratios describe the relationship between the Microsoft Corp. level of operations and the assets needed to sustain operating activities.
Analysis of Solvency Ratios
Examines Microsoft Corp. capital structure in terms of the mix of its financing sources and the ability of the firm to satisfy its longer-term debt and investment obligations.
Analysis of Short-term (Operating) Activity Ratios
Evaluates revenues and output generated by the Microsoft Corp. assets. Operating performance ratios describe the relationship between the Microsoft Corp. level of operations and the assets needed to sustain operating activities.
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