AnalysisandValuation(财务报表分析,台湾中兴大学.pptVIP

Equity Analysis and Valuation 2 2 Earning Power and Forecasting Earning Power Earning power is the earnings level expected to persist into the foreseeable future ? Accounting-based valuation models capitalize earning power ? Many financial analyses directed at determining earning power Earning Power and Forecasting Earning Power Measurement of Earning Power reflects: ? Earnings and all its components ? Stability and persistence of earnings and its components ? Sustainable trends in earnings and its components Earning Power and Forecasting Earning Power Factors in selecting a time horizon for measuring earning power ? One-year period is often too short to reliably measure earning power ? Many investing and financing activities are long term ? Better to measure earning power by using average (or cumulative) earnings over several years ? An extended period is less subject to distortions, irregularities, and other transitory effects ? Preferred time horizon in measuring earning power is typically 4 to 7 years Earning Forecasting Earning Power and Forecasting ? Mechanics of Earnings Forecasting ? Quantitative Methods—time-series and regression models ? Judgmental Methods ? Combinations of Quantitative and Judgmental Methods Earning Forecasting Earning Power and Forecasting Factors Impacting Earnings Forecasts Current and past evidence Continuity and momentum of company performance Industry prospects Management Management quality—resourcefulness Asset management—operating skills Economic and competitive factors Key Indicators such as ?capital expenditures ?order backlogs ?demand trends Monitoring and Revising Earnings Forecasts Earning Power and Forecasting Available Interim Reports ?Quarterly reports (Form 10?Q) ? Reports on current developments (Form 8?K) ? Disclosure of separate fourth-quarter results ? Details of year?end adjustments ? Interim reports filed with the SEC such as: Comparative int