Financial statement analysis and common stock valuation

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Common-Size Income Statement
Quarterly Data

Income statement components (revenues and expenses) shown as percentage of total sales.

Analysis of Solvency Ratios
Quarterly Data

Examines Procter & Gamble Co. 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.

• Solvency Ratios (Summary)
• Debt to Equity
• Debt to Capital
• Debt to Assets
• Financial Leverage
• Interest Coverage

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.

• Current EV
• Historical EV

Cash Flow Statement
Quarterly Data

The cash flow statement provides information about Procter & Gamble Co. 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 Procter & Gamble Co. balance sheet.

Aggregate Accruals

Financial reporting quality relates to the accuracy with which Procter & Gamble Co. reported financial statements reflect its operating performance and to their usefulness for forecasting future cash flows.
Aggregate accruals deriving measures of the accrual component of Procter & Gamble Co. earnings.

• Balance-Sheet-Based Accruals Ratio
• Cash-Flow-Statement-Based Accruals Ratio

Analysis of Geographic Areas

Procter & Gamble Co. operates in 2 regions: United States and International.

• Area Asset Turnover
• Net sales
• Long-lived assets

Balance Sheet: Assets

The assets reports major classes and amounts of resources owned or controlled by Procter & Gamble Co..

Income Statement

The income statement (statement of earnings) reports on the performance of Procter & Gamble Co., the result of its operating activities.

Income Statement
Quarterly Data

The income statement (statement of earnings) reports on the performance of Procter & Gamble Co., the result of its operating activities.

Analysis of Short-term (Operating) Activity Ratios
Quarterly Data

Evaluates revenues and output generated by the Procter & Gamble Co. assets. Operating performance ratios describe the relationship between the Procter & Gamble Co. level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle
• Average Payables Payment Period
• Cash Conversion Cycle

Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

The liabilities and stockholders’ equity reports major classes and amounts of external claims on assets and owners’ capital contributions, and other internally generated sources of capital.