□NPV: It is the present value of the future cash flows after netting out the initial investment To measure that companies worldwide use 2 criteria: IRR & NPV The corporate finance is all about adding value to shareholders & adding value is all about taking the projects which will be economically profitable So, once again the ROIC part comes into play & growth can be value destroying Now, what is this economic profit? It is the spread between the ROIC & WACC multiplied by the Invested Capital These are good & relevant, but the real value is generated from the economic profit of a business! So, low ROIC companies should focus on improving ROIC & not on growth & high ROIC companies should focus on growth more!Ī lot of folks who are new in the industry tend to focus on accounting earnings like net income & operating income Growth sounds good in theory but growth alone does not add value to the company's shareholders until & unless the above rule is fulfilled The shareholder value is only generated when a business earns ROIC (Return on Invested Capital) higher than its WACC (Weighted Average Cost of Capital) □So, here's what I learned about core finance from these books: □Yes, I did read all of them, in fact, I started reading about Investments & finance at the age of 17 only & made my first financial model of ITC Limited on a piece of paper, Lol! □I studied all these hardcore finance books cover to cover & here's what I learned about finance & Investing #Finance #FinancialAnalysis #FinancialStatements #DecisionMaking #ProfessionalDevelopment □ By leveraging financial statements and analysis techniques, professionals gain valuable insights to drive success. □ Financial statement analysis is a critical skill for professionals to make informed decisions and assess a company's financial well-being. □ Utilize insights to make informed business decisions. □ Compare financial performance to industry peers.Ħ️⃣ Interpretation & Decision-Making □□: □ Evaluate changes in financial data over multiple periods. Efficiency Ratios: Assess effectiveness in utilizing assets and resources. Solvency Ratios: Evaluate long-term financial viability. Profitability Ratios: Measure ability to generate profits. Liquidity Ratios: Assess short-term ability to meet obligations. □ Calculate key financial ratios for comprehensive analysis, including: □ Express line items as percentages to compare across time or companies. □ Understand the structure and components of financial statements. ✨ Key Steps in Financial Statement Analysis: □️ Tracks cash inflows and outflows, highlighting liquidity and cash management. □️ It assesses solvency and financial position. □️ Presents assets, liabilities, and equity. □️ It reflects profitability and efficiency. □️ Shows revenue, expenses, and net income. □ Let's explore the world of financial statement analysis! □ ↪️ By examining financial statements, professionals gain a comprehensive understanding of a company's profitability, liquidity, and solvency. □ Financial statement analysis provides valuable insights into a company's financial health and performance. □ Financial Statement Analysis Simplified □ Spread the word about this course by like, sharing, and commenting! Thanks to Financial Modeling World Cup, Anders Liu-Lindberg, Matt Brattin and Paul Barnhurst for contributing to this curation. How to resolve Common ERROR Messages in Excel 10 Financial Modelling Functions you should knowġ1. 5 Financial Modelling Excel Features you should knowģ. I have curated a FREE Excel curriculum for you.Ģ. Bookmark this and follow the curriculum below.
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