AFM101 Chapter Notes - Chapter 13: Financial Statement, Cash Cash, The Home Depot

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Rely on advice of professional analysts who develop recommendations. Analysts are expected to understand financial statements and formulate their own opinions. Industry factors: certain events have a major impact on each company within an industry, but have only a minor impact on other companies outside the industry b. Ie drought would be devastating for food industries but no effect on tech industry. Individual company factors: to properly analyze a company, learn as much as you can, good analysts don"t rely solely on f/s; they visit company, buy its products, etc. Dupont model: return on equity profit driver/lever analysis (roe decomposition): These ratios describe ways management can improve roe. 2 types of benchmarks for making financial comparisons: time series analysis, compare ratios over time, comparisons with other companies, must be careful when selecting comparable companies. An analytical tool designed to identify significant relationships between 2 financial statement amounts.