Modeling question - Potential ER associate position
I have to do a model for a potential equity research associate position, they asked to include a revenue sheet, profit and loss statement, balance sheet and cash flows. I'v been trying to figure out what a revenue sheet is exactly but I'm still not 100% on this. I'm thinking its just a breakdown of revenues by division and geography and is basically a driver for other parts of the model. Can anybody clarify this for me? Thanks.
What they are looking for is a bottoms up.
So for example lets take a look at apple here is the 8-K lets walk through this.
http://investor.apple.com/secfiling.cfm?filingID=1193125-13-20783&CIK=3…
So the "regular" income statement is the one that simply says "Net sales" and then has the number. What they are really asking for is a break out or "bottoms up" however you want to call it so instead of simply having one line that says revenue it should look like this.
Last Page of 8-K iPhone iPad Mac iPod iTunes/Software/Services Accessories Total = Number matches the net sales number.
This is how equity research models usually work unless the company is small and really only has a single revenue line like a small tech company.
The idea is that you "project" each product group EG iPhone revenue will grow at a different rate compared to iPad and iPod
In addition they are asking for Geographic breakouts this is also given when "the print" hits which is right above the breakout of revenue.
You see Asia/America... etc.
Again you're tracking revenue growth by region in this case as well.
So in sum what they are looking for is a "broken out" revenue by line item with each product projected differently. RARELY*** will you ever (in fact likely never) see revenue projected by geography, its usually done by product line.
Finally, in addition, you may want to do "operating margin" by segment. This is also key because maybe one product line is 50% of revenue but is really 75% of total Operating profit. This depends on the company's filings of course.
Hope that all helped good luck player.
^ Great response. SB.
WallStreetPlayboys, thanks a million times over. I had an internship in research before and the analyst just had that part added in the income statement sheet directly under net sales. Kind of threw me off to what they might be asking for. Again, Thanks!
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