Valuation Tutor develops your conceptual and practical skills, intuition, and professional judgment in the financial statement analysis and valuation of publicly traded companies. It lets you:
- The textbook presents an overview of filing requirements and explains what is contained in the major statements
- Learn how to extract information about a firm's business model and core strategy from these filings
- The software provides access to powerful common size analysis on the financial statements tools where the scaling variables are Sales (% of Sales), Total Assets (including ROA), Invested Capital (including ROIC), Capital Employed (including ROCE), Shareholders’ Equity (including ROE) and Market Price (including Earnings to Price and Book to Price)
- The software lets you explore the linkages among the financial statements when performing common size analysis. That is conduct your own forensic accounting investigations.
- Immediately contrast these linkages with current market deciles, and industry analysis
- The software lets you apply CVP analysis to the data sets for the purpose of analyzing contribution margins which can be contrasted to market deciles and industry analysis
- The software lets you extend contribution margin analysis to analyze the break-even sales revenue and margin of safety. Again this can be compared to market deciles and the industry.
- Profitability and risk analysis
- The textbook explains the major financial ratios starting from accounting or fundamental growth, DuPont decompositions, profitability ratios (including working capital, including EBITDA, EBIT, EBT, NOPAT) , risk ratios (including liquidity, solvency and Altman’s Z-score analysis), activity analysis (degree of operating leverage, degree of financial leverage and degree of total leverage)
- The textbook explains how the ratios are calculated from financial statements and includes a complete reconciliation using the Procter and Gamble 2010 10-K
- It includes two extensive case studies which illustrate how ratios are interpreted given the business model and core strategy of the company
- Conduct market decile analysis on any of the financial ratios to contrast and interpret these ratios.
- Conduct industry comparisons on any of the financial ratios to contrast and interpret these ratios
- Refine your professional judgment by exploiting Valuation Tutor’s powerful market decile and industry comparisons
- Conduct the same type of analysis as provided for financial ratios to price based ratios (Price to Earnings, Price to Sales, Price to Book, Price to Cash Flow Measures including Free Cash Flow (FCF)
- Market Risk Analysis using the Altman Model
- Quality of Earnings Analysis
- Conduct relative valuation using market deciles and industry analysis
- Estimate the Cost of Equity Capital using the Capital Asset Pricing Model (CAPM)
- Estimate the Cost of Equity Capital relative to Corporate Debt Ratings using the option based MCPM model
- Estimate the Weighted Average Cost of Capital (WACC)
- The textbook contains a detailed explanation of how to value companies using financial statements and current market information using
- Importance of growth behavior
- The Dividend Model and the Discounted Cash Flow Approach
- The Free Cash Flow to Equity Model (FCFE)
- The Residual Income Model (RIV)
- The Abnormal Earnings Growth Model (AEG)
- To conduct fundamental analaysis of companies
- To understand the drivers of profitability and risk
- To value companies and assess their expected return given current market prices
