Earnings Persistence Recasting and Adjusting Earnings persistence is a key to effective equity analysis and valuation Analyzing earnings persistence is a main analysis objective
Liquidity and Working Capital Basics Company Liquidity refers to the ability to meet short- term obligations Liquidity is the ability to convert assets into cash or to obtain cash Short term is the longer of one-year or the company operating cycle
Analyzing Profitability Focus of Profitability Analysis Profitability analysis is key part of financial statement analysis All financial statements are pertinent to profitability analysis Emphasis of profitability analysis is on the income statement
Return on Invested Capital Importance of Joint Analysis Joint analysis is where one measure is assessed relative to another Return on invested capital (ROI) is an important joint analysis
Income Measurement Concepts Illustration Facts: Company with$100,000 in cash Buys condo for$100,000 Rents condo for $12,000 per year End of the first year: Condo valued at
