CFO Bios and Company Profiles Tutorial

Transcription

1 CFO Bios and Company Profiles Tutorial Preparation for attending the CFO Roundtable begins with getting to know the CFOs who will be at your session and their respective companies. A good place to start this process is looking over the CFO bios and company profiles that will be provided. These bios are not exhaustive in terms of information a student should gather prior to attending their session. Rather, they give a basic level of background information that can be used to jumpstart additional research and help form good questions. The purpose of this document is to help you read and interpret the profiles/bios by: Explaining their features and how they can be used to derive meaningful information about the CFOs and their companies Defining select terms After reading this tutorial, you should be able to get valuable information out of the profiles/bios such as: The educational background of the CFO The career path of the CFO The industry in which their company operates The recent financial performance of their company The degree in which they operate globally Categories discussed within this tutorial have a circle with a number: 1 The number corresponds to an associated written section detailing the information in the sample bio and profile.

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3 1. Quick Facts: This section can be used to get a basic overview of some key qualities of the CFOs. As you begin to look over multiple bios, ask yourself questions such as: On average, how long have the CFOs worked for their current company? What s the average age of the CFOs? What s the range of ages? What did most of the CFOs major in during college? Were they finance/accounting focused, or something else? How many CFOs earned their MBA? Are most of the CFOs Certified Public Accountants? Asking these questions and others can help you identify trends within the pool of attending CFOs. For example, maybe you want to become a CFO, but didn t plan on pursuing an MBA. However, you may begin to notice that a certain percentage of the attending CFOs have MBAs. This may influence your thinking about pursuing an MBA. In addition, you may consider asking a CFO that has an MBA a question such as how much influence has your MBA had on your ability to become a CFO? 2. Career Path: This section is designed to give you a good feel for some of the companies the CFOs have worked for and the positions they have held. Once again, the goal is to identify common trends between the visiting CFOs. For example, maybe you will notice that a certain percentage of the CFOs attending worked in a Big Four accounting firm at some point in their career. This may cause you to ask a CFO a question along the lines of it seems like many of today s attending CFOs have worked in the Big Four at some point. Do you think Big Four experience is beneficial or necessary for individuals wanting to become a CFO? When reading this section ask yourself questions like: How old were they when they held each position in their career? In what sequence did they hold each position (i.e. staffsenior staffmanageretc.). How many companies have they worked for? How many positions have they held?

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5 3. Quick Facts: This section is designed to give you an initial idea on: Location of the firm Level of involvement with Kelley Type of business Extent of global operations 4. Graphs: Each company profile features two graphs. (Graphs for privately held companies may not be available). The graphs are taken from Bloomberg and show quarterly data for the past five years, beginning with the company s most recent earnings release. - Revenue: o Calculation: Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. o Commentary: Revenue is strictly related to how much a company is able to generate in sales. It is affected by price changes of products/services and by changes in sales volume. For a company to be sustainable, it must establish revenue as its primary source of cash in-flow. o More info: - Market Capitalization: o Calculation: Market capitalization is calculated by multiplying the number of a company s shares outstanding times the current market price of one share. o Commentary: Market cap is widely used by the investment community as a measurement of company size. In essence, it can be seen as the net worth of the company as it is the value of a company s equity. However, market cap can be misleading at times, especially when the value of a stock doesn t represent the fundamental value of its underlying asset. Despite this, when used with other financial metrics, market cap can be a solid indication of a company s value. o More info: 5. Financial Information: Provides the most up-to-date measure of select financial information. - Revenues: (see section 4) - Assets o Calculation: While calculation of a company s total assets (what they own that is expected to provide future economic value) is a simple addition problem, valuing the individual assets themselves can be a complex and somewhat subjective process. For instance, there are multiple methods used to value inventory such as LIFO and FIFO. In addition, depreciation can also be calculated in a number of ways by using methods including straight-line, declining-balance, sum-of-years digits, and more. o Commentary: Many times, choosing one method of asset valuation over another can have dramatic accounting effects. Companies are certainly aware of this, and try to choose methods that will have the most favorable effect on their financial statements. o More info: - Enterprise Value:

6 o Calculation: Enterprise value is calculated as: +market cap +debt +minority interest +preferred shares -total cash -cash equivalents =Enterprise Value o Commentary: Enterprise value is thought of as a theoretical takeover price. It is designed to reflect the market value of the firm. What makes it often considered as more accurate than market cap is the fact that it takes into account debt and cash. Moreover, in the event of a real acquisition of a company, the buyer would take on the purchased company s debt, but would also obtain their cash on hand. o More info: - Net Income: (see section 4) - Debt/Equity Ratio: o Calculation: =Total Liabilities/Stockholders Equity o Commentary: Higher debt/equity ratios indicate that a firm has been more aggressive in financing its growth through debt. The more a firm borrows, the more it leverages its equity. Thus, by not expanding through the raising of equity, the firm shares its increase in earnings (or losses) with a smaller base of investors. For owners of the firm, this essentially multiplies the gains or losses they incur. Higher leverage creates higher risk, and is something that often either dramatically helps, or hurts a company. o More info: 6. Important Links - Annual Report: The annual report is a comprehensive document that highlights a company s activities and financial performance for the period. - Mission and Vision Statement: Statement describing the overall purpose and goals of a company. Company mission and vision statements are designed to guide the strategic decisions the company makes. - Quarterly Earnings Conference Call: These calls are used to relay company financial performance information to investors and other interested parties. They address the causes for favorable and unfavorable performance during the period, as well as look forward to the future outlook of the business environment. Conclusion This concludes the tutorial. We hope you found it to be useful as you prepare to attend the event. Remember, reading the bios/profiles is only the first step in your research process. Additional research will guarantee you are fully prepared to attend.