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:
Verizon Communications Inc. (NYSE:VZ)
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.
Cash Flow Statement
The cash flow statement provides information about Verizon Communications Inc. 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 Verizon Communications Inc. balance sheet.
Common Stock Valuation Ratios
Quarterly Data
Relative valuation technique determine the value of Verizon Communications Inc. by comparing it to similar entities (like industry or sector) on the basis of several relative ratios that compare its stock price to relevant variables that affect the stock value, such as earnings, book value, and sales.
Long-term Trends
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.
Analysis of Solvency Ratios
Examines Verizon Communications Inc. 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.
Aggregate Accruals
Financial reporting quality relates to the accuracy with which Verizon Communications Inc. 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 Verizon Communications Inc. earnings.
Analysis of Short-term (Operating) Activity Ratios
Evaluates revenues and output generated by the Verizon Communications Inc. assets. Operating performance ratios describe the relationship between the Verizon Communications Inc. level of operations and the assets needed to sustain operating activities.
Balance Sheet: Assets
Quarterly Data
The assets reports major classes and amounts of resources owned or controlled by Verizon Communications Inc..
Common-Size Income Statement
Income statement components (revenues and expenses) shown as percentage of total sales.
DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
An approach to decomposing Verizon Communications Inc. return on equity, return on assets, and net profit margin ratio as the product of other financial ratios.
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