Clues in Financial Reporting Analysis

I want to preface this question by stating I understand that there is no such thing as an apples-to-apples comparison cross-industry. That being said, I wanted to see if any analysts had anything that they generally look for when evaluating a new business off the bat — good or bad — when reading their financial reports (10-K/Q, 8-K, S-1/4, Press Releases, etc)? This could be a more quantitative, financial statement focused data point (Days in accounts payable, Cash conversion cycle, Specific profitability/liquidity ratios, etc) or more qualitative (Unresolved staff comments, Specific footnotes, Accounting policies, etc). In other words, I’m curious to see if there’s any data point/process that could help drive a more holistic analysis or provide clues on strengths or weaknesses of the company? Thanks in advance for your insight!

 

Unfortunately it’s much more complicated than that.

1) It’s very Industry dependent.
2) you then need to compare to peers
3) you then need to figure out valuation and if the stock is a buy or sell based on expected return which is largely irrelevant of business quality.

A lot of guys like ROIC which you’ll have to calculate yourself. It looks at the returns that assets are generating irregardless of capital structure. High ROIC is sign of a moat / good business.

 

I also like the 'emphasis of a matter' from the audit opinion. It doesn't mean management has done anything wrong or is doing its accounting aggressively, just tells you what the auditor thinks the most critical accounting policies or nuances are - is it revenue recognition, inventory cost capitalization, impairments?

And can it ever be?
 

Alias enim voluptatem officia nam iure. Ut in enim omnis consequatur facilis in corporis.

Career Advancement Opportunities

June 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Perella Weinberg Partners New 98.9%
  • Lazard Freres 01 98.3%
  • Harris Williams & Co. 24 97.7%
  • Goldman Sachs 16 97.1%

Overall Employee Satisfaction

June 2024 Investment Banking

  • Harris Williams & Co. 19 99.4%
  • Lazard Freres 06 98.9%
  • JPMorgan Chase 09 98.3%
  • Morgan Stanley 05 97.7%
  • Moelis & Company 01 97.1%

Professional Growth Opportunities

June 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.9%
  • Perella Weinberg Partners 18 98.3%
  • Goldman Sachs 16 97.7%
  • Moelis & Company 05 97.1%

Total Avg Compensation

June 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (22) $375
  • Associates (94) $260
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (69) $168
  • 1st Year Analyst (206) $159
  • Intern/Summer Analyst (151) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
DrApeman's picture
DrApeman
98.8
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”