Enjoyed this video? Then please subscribe to the channel! Let's explore the next level of financial analysis in more detail: financial ratio analysis ruclips.net/video/MTq7HuvoGck/видео.html
Hey 👋 I wanna thank u for ur amazing work. Today I completed all of your videos and I wrote a note and it filled half of my book. I gained a lots of new knowledge.
Hello again! I would be interested to hear what you think is the top 3 of things you have learned from watching my videos.... Can you give me a short list of "eye openers"?
The Finance Storyteller The Finance Storyteller hello for me I feel like the reading real company financial statement is the best , T account and so many new terminology.
Great! :-) Please apply what you have learned to a company that you are interested in (for example, a company that you bought shares in). The terms "come alive" when you do your own research.
Welcome aboard! Yeah, it's nice to drop in a reference once in a while, for the amusement of viewers as well as myself. 😎 There's also a reference to the band Motorhead in one of the videos "CVS presents CFOA using the direct method! Isn’t that exciting? Isn’t that exciting? [MIX IN CHEERING CROWD] Thank you!" 😉
Excellent video! I've just started investing in stocks and these videos are very helpful. I have been using 5/10y historical CAGR to estimate potential future CAGR, then discounting this future price back to current day and comparing to the actual stock price. I then create a shortlist of the stocks that 'appear' good value, then I review everything you mentioned in this video to see if it's a stable, profitable future business and to see if the CAGR predictions for the stock need to be adjusted. As a tip if you add in some high-interest stock examples to your videos, it may increase the viewer count. For example Nio, Nikola & Tesla stocks are all very hyped at the moment and they all have very different fundamentals!
Great! Always take special care when extrapolating CAGRs, as the world moves in "shocks" at times, rather than following a predictable line.... so those historical CAGRs might not repeat in the future! As 2020 has shown, businesses that looked stable and predictable in the past were suddenly faced with sharply dropping revenue and profits (travel industry, aircraft manufacturers, etc.). I did some videos in the past regarding Tesla cash flow, might make some new ones around the names you have mentioned, thank you for the suggestions.
@@TheFinanceStoryteller Yes I fully agree! For me the CAGR provides the shortlist and the Financial Analysis provides the go/no go per stock. The second part is highly subjective of course but it was very reassuring to watch your video and for you to cover the exact details I have been watching closely in my decision-making process. Analyst calls & statements are also valuable to understand the 'why' details behind the numbers. Keep up the great work and I really value your channel! Thanks!
Great minds think alike! ;-) I think a term you will also enjoy is "convex payoff" (in order words "lift-off" potential of a stock). Biotech and software are two industries were this has happened to me, see the overview of my stock portfolio in my "What is an ETF" video ruclips.net/video/GBLNKbOgQ4w/видео.html The opposite of convex is concave, those are stocks to stay away from. I cover that in my SWOT analysis video ruclips.net/video/gUAOTQbST8E/видео.html
I think your calculation is wrong at 1:46, the correct one should be (CY/PY) -1 which I usually do. Anyway I like your videos, is simple and educated. Since I am self-educated mainly study The Intelligent Investor and Security Analysis by Ben Graham, I like to watch your videos if I don't have the clear mind, especially accounting principles.
I have a question: For a conglomerate that usually acquires businesses, shouldnt we consider the cash outflows that result in these acquisitions in the CFFO instead of CFFI?
No. CFFO is for day-to-day operational cash flow (the company receives cash from customers, and pays cash to suppliers, for example). The CFFI section is for investments such as Capital Expenditures and acquisitions. See also my video on the cash flow statement (direct and indirect format) with the official FAS95 accounting statement examples: ruclips.net/video/Dy6iZeakLQ4/видео.html
Great video! Just one technicality question/comment: the 210 operation margin/EBIT line shall be a actually operating income/EBIT? Since the operating margin is EBIT/Revenue 21%.
Good catch! When I say Operating Margin / EBIT, the "/" does not mean divide by, but it means "Operating Margin also known as EBIT". Operating Margin, also known as EBIT, is $210K, and as % of revenue it is 21%. Does that help? I used this example with numbers, as it is the same as "Company A" in my financial ratio analysis video: ruclips.net/video/MTq7HuvoGck/видео.html
this was very important video ! after i saw the video i have question that very related to this video. if the net income comes from revenue how can it be that net income can grows much faster than revenue over a period of few years ? thanks in advance philip
Very good point! A lot of companies that I have analyzed state that their financial goals are to grow their revenue faster than the market is growing, and then grow profit faster than revenue.... The way that works is a variation on the theme "variable cost" vs "fixed cost". If a company starts off with (simplified P&L) these numbers this year: Revenue $1MM COGS $500K Gross Margin $500K (=revenue minus COGS) SG&A + R&D $300K Operating Margin $200K (=Gross Margin minus SG&A + R&D) Tax $40K (20% of Operating Margin) Net Income $160K (=Operating Margin minus Tax) The company is able to scale up quickly now that they product has come to market. They double the revenue. COGS and Gross Margin double as well (sell more product, incur more production cost to make the product you sell). SG&A + R&D are increased, but not doubled. Next year's P&L looks like this: Revenue $2MM COGS $1MM Gross Margin $1MM SG&A + R&D $400K Operating Margin $600K Tax $120K Net Income $480K If you analyze year-over-year, then revenue and Gross Margin double, while Operating Margin and Net Income triple!
@@TheFinanceStoryteller You really opened my head in a different direction, thank you very much for the answer. Lowering taxes and buyback also can make this result ? or buyback just increase EPS
Yes, tax effects can also impact Net Income growth. That's why there's so much focus on Operating Income (EBIT) in corporate presentations, to exclude the effect of interest and taxes. Buybacks impact the denominator in EPS (which is Net Income divided by # of shares outstanding). That would be the next step in the above example.
Bonus tip: take a look at the first minute of my video on how to build waterfall charts in Excel. This is a "variance analysis" showing how the company got from prior year about to current year EBIT. It is used a lot internally in companies in business reviews, and sometimes externally in investor presentations. The first minute explains what the graph means, the rest of the video how to build it in Excel (which might be less interesting for you): ruclips.net/video/xnrQEn4jCsA/видео.html
Could you do an FA analysis for Standard Chartered PLC to shed some light on this stock going forward .. bought it at GBP1212, it is now trading about GBP 462.10 .. thanks
Enjoyed this video? Then please subscribe to the channel! Let's explore the next level of financial analysis in more detail: financial ratio analysis ruclips.net/video/MTq7HuvoGck/видео.html
This is hands down one of the most valueable videos in terms of quality/minute on the topic. Thank you.
Glad you think so! Please spread the word to friends and colleagues.
Just to want to thank you for all these videos!
My pleasure!
So good to see you, not only hear the voice! Well done video, great summary, useful information, all as usual!
Thank you kindly!
Hey 👋
I wanna thank u for ur amazing work. Today I completed all of your videos and I wrote a note and it filled half of my book. I gained a lots of new knowledge.
Wow! Amazing! So happy to hear this. Glad that the videos are helpful to you, now it's time to go apply your knowledge! :-)
Hello again! I would be interested to hear what you think is the top 3 of things you have learned from watching my videos.... Can you give me a short list of "eye openers"?
The Finance Storyteller The Finance Storyteller hello for me I feel like the reading real company financial statement is the best , T account and so many new terminology.
Great! :-) Please apply what you have learned to a company that you are interested in (for example, a company that you bought shares in). The terms "come alive" when you do your own research.
@@TheFinanceStoryteller +1 to the reading real statement videos, they are my favorite.
you gained a subscriber with that Monty Phyton reference, great content!
Welcome aboard! Yeah, it's nice to drop in a reference once in a while, for the amusement of viewers as well as myself. 😎
There's also a reference to the band Motorhead in one of the videos "CVS presents CFOA using the direct method! Isn’t that exciting? Isn’t that exciting? [MIX IN CHEERING CROWD] Thank you!" 😉
Excellent video! I've just started investing in stocks and these videos are very helpful. I have been using 5/10y historical CAGR to estimate potential future CAGR, then discounting this future price back to current day and comparing to the actual stock price. I then create a shortlist of the stocks that 'appear' good value, then I review everything you mentioned in this video to see if it's a stable, profitable future business and to see if the CAGR predictions for the stock need to be adjusted. As a tip if you add in some high-interest stock examples to your videos, it may increase the viewer count. For example Nio, Nikola & Tesla stocks are all very hyped at the moment and they all have very different fundamentals!
Great! Always take special care when extrapolating CAGRs, as the world moves in "shocks" at times, rather than following a predictable line.... so those historical CAGRs might not repeat in the future! As 2020 has shown, businesses that looked stable and predictable in the past were suddenly faced with sharply dropping revenue and profits (travel industry, aircraft manufacturers, etc.). I did some videos in the past regarding Tesla cash flow, might make some new ones around the names you have mentioned, thank you for the suggestions.
@@TheFinanceStoryteller Yes I fully agree! For me the CAGR provides the shortlist and the Financial Analysis provides the go/no go per stock. The second part is highly subjective of course but it was very reassuring to watch your video and for you to cover the exact details I have been watching closely in my decision-making process. Analyst calls & statements are also valuable to understand the 'why' details behind the numbers. Keep up the great work and I really value your channel! Thanks!
Great minds think alike! ;-) I think a term you will also enjoy is "convex payoff" (in order words "lift-off" potential of a stock). Biotech and software are two industries were this has happened to me, see the overview of my stock portfolio in my "What is an ETF" video ruclips.net/video/GBLNKbOgQ4w/видео.html The opposite of convex is concave, those are stocks to stay away from. I cover that in my SWOT analysis video ruclips.net/video/gUAOTQbST8E/видео.html
Hey, I've been doing the same thing, but I can't create a spreadsheet for the intrinsic value. Would you mind sending me yours?
If I had one, I would send it to you, but I don't calculate "intrinsic values" (as I question whether this concept has any merit).
Great lectures. Keep up the good work
Thanks, Manorath! Will do!
I think your calculation is wrong at 1:46, the correct one should be (CY/PY) -1 which I usually do.
Anyway I like your videos, is simple and educated. Since I am self-educated mainly study The Intelligent Investor and Security Analysis by Ben Graham, I like to watch your videos if I don't have the clear mind, especially accounting principles.
My apologies for that mistake, you are correct. Thanks for notifying me, and happy to hear you are enjoying my videos!
Thanks
insightful !
Thank you!
I have a question: For a conglomerate that usually acquires businesses, shouldnt we consider the cash outflows that result in these acquisitions in the CFFO instead of CFFI?
No. CFFO is for day-to-day operational cash flow (the company receives cash from customers, and pays cash to suppliers, for example). The CFFI section is for investments such as Capital Expenditures and acquisitions. See also my video on the cash flow statement (direct and indirect format) with the official FAS95 accounting statement examples: ruclips.net/video/Dy6iZeakLQ4/видео.html
@@TheFinanceStoryteller Thanks, will watch right away
You're welcome! Please subscribe to the channel. More videos to come!
Great video! Just one technicality question/comment: the 210 operation margin/EBIT line shall be a actually operating income/EBIT? Since the operating margin is EBIT/Revenue 21%.
Good catch! When I say Operating Margin / EBIT, the "/" does not mean divide by, but it means "Operating Margin also known as EBIT". Operating Margin, also known as EBIT, is $210K, and as % of revenue it is 21%. Does that help? I used this example with numbers, as it is the same as "Company A" in my financial ratio analysis video: ruclips.net/video/MTq7HuvoGck/видео.html
thank u
You're welcome!
this was very important video !
after i saw the video i have question that very related to this video.
if the net income comes from revenue how can it be that net income can grows much faster than revenue over a period of few years ?
thanks in advance philip
Very good point! A lot of companies that I have analyzed state that their financial goals are to grow their revenue faster than the market is growing, and then grow profit faster than revenue.... The way that works is a variation on the theme "variable cost" vs "fixed cost".
If a company starts off with (simplified P&L) these numbers this year:
Revenue $1MM
COGS $500K
Gross Margin $500K (=revenue minus COGS)
SG&A + R&D $300K
Operating Margin $200K (=Gross Margin minus SG&A + R&D)
Tax $40K (20% of Operating Margin)
Net Income $160K (=Operating Margin minus Tax)
The company is able to scale up quickly now that they product has come to market. They double the revenue. COGS and Gross Margin double as well (sell more product, incur more production cost to make the product you sell). SG&A + R&D are increased, but not doubled. Next year's P&L looks like this:
Revenue $2MM
COGS $1MM
Gross Margin $1MM
SG&A + R&D $400K
Operating Margin $600K
Tax $120K
Net Income $480K
If you analyze year-over-year, then revenue and Gross Margin double, while Operating Margin and Net Income triple!
@@TheFinanceStoryteller You really opened my head in a different direction, thank you very much for the answer.
Lowering taxes and buyback also can make this result ? or buyback just increase EPS
Yes, tax effects can also impact Net Income growth. That's why there's so much focus on Operating Income (EBIT) in corporate presentations, to exclude the effect of interest and taxes. Buybacks impact the denominator in EPS (which is Net Income divided by # of shares outstanding). That would be the next step in the above example.
@@TheFinanceStoryteller thanks philip,
Bonus tip: take a look at the first minute of my video on how to build waterfall charts in Excel. This is a "variance analysis" showing how the company got from prior year about to current year EBIT. It is used a lot internally in companies in business reviews, and sometimes externally in investor presentations. The first minute explains what the graph means, the rest of the video how to build it in Excel (which might be less interesting for you): ruclips.net/video/xnrQEn4jCsA/видео.html
Could you do an FA analysis for Standard Chartered PLC to shed some light on this stock going forward .. bought it at GBP1212, it is now trading about GBP 462.10 .. thanks
Hi Helen! I am not very interested in banking and financial services, so will not make a case study on it.
Hi
Hi