Performance Analysis

Performance Analysis • Are you feeling Lost? • Begin your performance analysis by developing a strategy. • What issues are important to you? • Profitability? Solvency? Share Value? Dividends? Asset Utilization? Social Responsibility, Other?

Select an industry Prepare an overview of the industry Select a Target Select a Benchmark Get Annual Reports on both companies Summarize stock price history Collect current news on both companies Checklist to begin

Organize your data • 1) Profit, Equity, & Share Value mgt. • 2) Debt mgt. • 3) Cash mgt. • 4) Asset mgt. • 5) Relationship mgt. • 6) Positioning

Your Investigation Begins… • Follow the nightly news • Read the Wall Street Journal and other important business newspapers • Read the NY Times • Search online

This is the Surveillance Stage 1. Enter two years of financial data for the target company 2. Review the results & make notes 3. Perform the same procedure for the Benchmark 4. Compare Target to Benchmark & note results 5. Read all Footnotes 6. Look for inconsistencies (e.g. increases in profits and decreases in cash type (liquid) accounts) 7. Check current news. Look for qualitative performance issues such as ethical behavior, good/bad relationships, and positioning for the future

1.01) Income to Sales 1.02) GP to Sales 1.03) Return on Equity 1.04) Pd-in Cap/Tot Cap 1.05) Earn Cap/Tot Cap 1.06) %Chg in Tot Equity 1.07) Basic EPS 1.08) Diluted EPS 1.09) Share Price 1.10) P/E Ratio 1.11) Dividend Payout 1.12) Dividend Yield Profit, Equity, and Share Value management

Part One: 2.13) Curr Liab/tot Debt 2.14) Non-Curr Liab/tot Debt 2.15) Curr Assets/tot Assets 2.16) Non-Curr Assets/tot Assets Part Two: 2.17) Times Interest Earned 2.18) Curr Cash Coverage 2.19) Average Payment Period 2.20) Tot Debt to Tot Assets Debt management

Cash management 3.21) Current Ratio 3.22) Quick Ratio 3.23) Cash Flow from Operating Activities/Sales 3.24) Cash & Cash Equiv/tot Assets

Asset management(Effective use of company assets) 4.25) Sales/tot Assets 4.26) Net Inc/tot Assets 4.27) Average Collect 4.28) Age of Inventory

Relationship/Ethical issues 5.29) Employee Relations 5.30) Customer Relations 5.31) Competitor Relations 5.32) Director Relations 5.33) Government Relations 5.34) Environmental record 5.35) Sensitivity: Good/Bad Citizenship & community sensitivity 5.36) Stockholder Relations 5.37) Communication 5.38) Public Persona 5.39) Vendor Relations

Strategic Positioning • 6.40) Vision & Mission • 6.41) Competitive Advantage • 6.42) Environment: External • 6.43) Environment: Internal • 6.44) Expansion: Plans and Progress

Performance Analysis