Question about Future Corporate Valuation
 

Yesterday, I had a phone interview. THe interviewer asked me what I would look at to guess what the future performance of a corporation would be. The interview was with an insurance company so I came up with a pretty good answer...the loss ratio. For those of you who don't know, loss ratio=incurred losses/written premium. It's pretty big in the insurance world.

However, I have another interview tomorrow with a semiconductor company. I started thinking about how I would answer the same question in the new interview and I drew a complete blank. More precisely, I became overwhelmed with answers. Would you look at a financial ratio? Something specialized to the semiconductor industry? R&D maybe? Net Income? The industry as a whole? It seems like you could give a million different answers.

Any ideas?

Re: Question about Future Corporate Valuation
 

Mentioning financial ratios and other internal factors is good, but i think an important point you're missing is the external factors. Performance of a corporation is highly dependent on industry growth/performance, competitors, etc.

Re: Question about Future Corporate Valuation
 

Go at it by quantitative and qualitative analysis...

Quant:

DCF Method (know the formula)
P/E and other ratios compared to industry/sector avg

Qual:
Competition in the marketplace (Five Forces Model)
Future outlook of sector
General public conceptions of the company
Product pipeline