#1
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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? |
#2
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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.
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#3
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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 |
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