MGCR 211 Lecture Notes - Income Statement, Profit Margin, Differentiator
15 Jan 2013
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Trying to predict future performance and risk of the company (i. e. will they repay the loan?) from past data: looking for trends, hoping that the past is a predictor of the future. Trying to assess past performance (i. e. management decisions) Other companies in the industry: economic data. Analysis can be done for many reasons. Different users/analysts are interested in different things will do different type of analysis. Creditors/lenders: care about future cash flows to see if debt will be repaid, wants the company to be solvent in the long run. Shareholders/investors: want to earn dividends and see share price go up, willing to take them more risk if its going to give them a higher rate of return. Getting started on the analysis by understanding the business. Common strategies: low-cost producer (selling in low price but low profit margin, product differentiator (operating at the high end, where people are willing to pay high prices)
