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The Art of Company Valuation and Financial Statement Analysis: A Value Investor's Guide with Real-life Case Studies

Book Description

The Art of Company Valuation and Financial Statement Analysis: A value investor's guide with real-life case studies covers all quantitative and qualitative approaches needed to evaluate the past and forecast the future performance of a company in a practical manner.

Is a given stock over or undervalued? How can the future prospects of a company be evaluated? How can complex valuation methods be applied in practice? The Art of Company Valuation and Financial Statement Analysis answers each of these questions and conveys the principles of company valuation in an accessible and applicable way. Valuation theory is linked to the practice of investing through financial statement analysis and interpretation, analysis of business models, company valuation, stock analysis, portfolio management and value Investing.

The book's unique approach is to illustrate each valuation method with a case study of actual company performance. More than 100 real case studies are included, supplementing the sound theoretical framework and offering potential investors a methodology that can easily be applied in practice.

Written for asset managers, investment professionals and private investors who require a reliable, current and comprehensive guide to company valuation, the book aims to encourage readers to think like an entrepreneur, rather than a speculator, when it comes to investing in the stock markets. It is an approach that has led many to long term success and consistent returns that regularly outperform more opportunistic approaches to investment.

Table of Contents

  1. Cover
  2. Half Title page
  3. Title page
  4. Copyright page
  5. Acknowledgements
  6. Preface
  7. Chapter 1: Introduction
    1. 1.1 Importance and Development of Business Accountancy
    2. 1.2 Composition and Structure of Financial Statements
  8. Chapter 2: Key Ratios for Return and Profitability
    1. 2.1 Return on Equity
    2. 2.2 Net Profit Margin
    3. 2.3 EBIT/EBITDA Margin
    4. 2.4 Asset Turnover
    5. 2.5 Return on Assets
    6. 2.6 Return on Capital Employed
    7. 2.7 Operating Cash Flow Margin
  9. Chapter 3: Ratios for Financial Stability
    1. 3.1 Equity Ratio
    2. 3.2 Gearing
    3. 3.3 Dynamic Gearing Ratio
    4. 3.4 Net Debt/EBITDA
    5. 3.5 Capex Ratio
    6. 3.6 Asset Depreciation Ratio
    7. 3.7 Productive Asset Investment Ratio
    8. 3.8 Cash Burn Rate
    9. 3.9 Current and Non-Current Assets to Total Assets Ratio
    10. 3.10 Equity to Fixed Assets Ratio and Equity and Long-Term Liabilities to Fixed Assets Ratio
    11. 3.11 Goodwill Ratio
  10. Chapter 4: Ratios for Working Capital Management
    1. 4.1 Days Sales Outstanding and Days Payables Outstanding
    2. 4.2 Cash ratio
    3. 4.3 Quick Ratio
    4. 4.4 Current Ratio/Working Capital Ratio
    5. 4.5 Inventory Intensity
    6. 4.6 Inventory Turnover
    7. 4.7 Cash Conversion Cycle
    8. 4.8 Ratios for Order Backlog and Order Intake
  11. Chapter 5: Business Model Analysis
    1. 5.1 Circle of Competence
    2. 5.2 Characteristics
    3. 5.3 Framework Conditions
    4. 5.4 Information Procurement
    5. 5.5 Industry and Business Analysis
    6. 5.6 SWOT Analysis
    7. 5.7 Boston Consulting Group (BCG) Analysis
    8. 5.8 Competitive Strategy
    9. 5.9 Management
  12. Chapter 6: Profit Distribution Policy
    1. 6.1 Dividend
    2. 6.2 SHARE BUYBACK
    3. 6.3 Conclusion
  13. Chapter 7: Valuation Ratios
    1. 7.1 Price-to-Earnings Ratio
    2. 7.2 Price-to-Book Ratio
    3. 7.3 Price-to-Cash Flow Ratio
    4. 7.4 Price-to-Sales Ratio
    5. 7.5 Enterprise Value Approach
    6. 7.6 EV/EBITDA
    7. 7.7 EV/EBIT
    8. 7.8 EV/FCF
    9. 7.9 EV/Sales
  14. Chapter 8: Company Valuation
    1. 8.1 Discounted Cash Flow Model
    2. 8.2 Valuation Using Multiples
    3. 8.3 Financial Statement Adjustments
    4. 8.4 Overview of the Valuation Methods
  15. Chapter 9: Value Investing
    1. 9.1 Margin of Safety Approach
    2. 9.2 Value Investing Strategies
    3. 9.3 The Identification of Investment Opportunities
    4. 9.4 Portfolio Management
    5. 9.5 Buying and Selling: Investment Horizon
    6. 9.6 Conclusion
  16. Table and Figure Credits
  17. Index