Resume / LinkedIn
What club should you put on your LinkedIn?
MEI
What could I do better in presentations?
Anything
What are the three financial statements and what purpose does each serve?
IS: Revenues – Expenses = Net Income in a period
BS: Snapshot of what the company owns and owes
CFS: Flow of cash over a period from Operations, Investing and Financing
What is a DCF valuation?
Discounted Cash Flow model: Project out free cash flows and discount them to today
What is a comparables analysis?
Determining a company's stock price based on comparable companies and what their shares are trading at in the markets
What photo should you put on your LinkedIn?
MEI Headshot (If you like it)
What should you do with your hands while presenting?
In front of you, beside you, or behind you
What happens on the balance sheet when raise $50mm in long-term debt?
A: +50mm
L: +50mm
E: Unchanged
How long is the explicit forecast period? Why might it be shorter/longer?
Typically 5-10 years.
Shorter: If we cannot reasonably predict performance / reaching terminal growth rate.
Longer: Biopharma or energy provider with long, complex delivery of goods / services that need extra modeling
How many companies do we typically want in this?
3-5, up to 10
How many lines of text should you have per bullet on your resume?
It depends: I like 1, you can do 2
Where should you never look during a presentation?
Down at your feet
What happens on the balance sheet when I purchase $2000 worth of steel to hold in inventory for my eventual iPhone production?
A: Cash down $2000, Inventory up $2000 = $ Unchanged, while line item values are changed
L: $ Unchanged
E: $ Unchanged
Value of the company past explicit forecast and into perpetuity.
Gordon Growth: (1+g)/(WACC – g)
Multiples Method: Final Year Operating Metric (EBITDA) x (Comps EBITDA multiple)
What are some advantages of Comps relative to DCF? Disadvantages?
Advantages: Market based, Quick and Easy, Not subject to too much analyst manipulation
Disadvantages: Market based, Not based on our assumptions
How many bullets should you have under each experience on your resume?
1, 2 or 3: Explain
What should the split be between looking at the audience and at the slides?
80/20
What happens on the 3 statements when I produce and deliver iPhones that use up the $2000 in inventory? Revenue I generate from the sale is $5000 tax rate is 20% (assume no other expenses)
IS: $5000-2000 = $3000(1-0.20) = $2400
CFS: $2400 up in cash from Net Income, $2000 up in Inventory as a reversal from a prior period, no further add backs: Net change in cash: $4400
BS: A: Cash up $4400, Inventory down $2000 , L: Unchanged, E: Up $2400
What discount rate do we use in an unlevered DCF and what is the calculation?
WACC: Weighted Average Cost of Capital
%Debt * Cost of Debt + %Equity * Cost of Equity
What was the best comp for Ørsted this past week?
Vestas
Should you include summer jobs on your linked in and resume?
Yes!
What is the single most important part of a presentation?
Keep it concise and simple. If you can't do these things, then you do not understand the information.
IS: $10 Expense, taxed at 40% is a net income decrease of $6
CFS: -$6 + $10 add back for depreciation has CFO up $4. Net change in cash is up $4
BS: A: Cash up $4, PPE down $6, L: Unchanged, E: Retained Earnings down $6 from net income loss
Should MEI buy this stock given the following assumptions:
Present day cash flows are $100, growing 2% each year into perpetuity. Our discount rate is 10%. There are 25 shares in the company. The stock price is currently $49.
$100 x ((1+0.02) / (0.10-0.02)) = $1275
$1275/25 = $51 / Share
$51/$48 - 1 = ~4% return
I would say no, do not invest.
What do we need to standardize for across comps? Why?
Industry, Size, Geography.
Establish a similar discount rate.