Friday, March 4, 2011

What should be important in the analysis for small- and mid-size firms?

In the past two days, our conference calls were about what should be the three most important parts in analysis of the two different sized companies. We believe this will help us with the way we analyze our target firms, hence to improve the quality of our reports. Bellow are the rankings some opinions posted by our members:


1. Industry analysis 2. Trend analysis 3. Ratio analysis

1. Ratio analysis: analyze based on financial reports: assets, liabilities, cash flows, solvency, liquidity, and profitability, to get info about the company's performance.
2. Industry analysis: industry trend & development, compare it with the average level in the industry
3. Business analysis: the company's primary transactions, business prospects in the future


1. Business analysis: it's always the most important to understand what the businesses are for a company, especially when the target company becomes bigger and more complicated. For mid-size ones, they operate in more areas and have more businesses than small financial firms.
2. Market analysis: different from analyzing the small companies, mid-size financial companies are more connected to the overall economy, thus the whole financial market. Of course, the market here stands for the ones our companies are operating in, instead of the U.S. or world market.
3. Industry (competitor) analysis: some of the mid-size firms may not have substantial competitors in its operational region, so it's helpful to compare other peers from other regions with it and draw a picture of the industry

1. Industry analysis: Is important because you need to know the nature of the industry and its characteristics.
2. Competitors analysis: Is important because you will know how these firms compete with each other and whether the competition comes from the industry itself or also from other industries such as big firms.
3. Assets and Liabilities analysis: The asset and liability size is important and whether they are strong enough to weather any financial storms.

Although some of our ideas overlap with others', there are still things we hold different opinion. Sometimes I just want to have a debate on topics like this. A long debate...

-- Chang

No comments:

Post a Comment