Introduction to Financial Statement Modeling
4 important questions on Introduction to Financial Statement Modeling
Expectations of a irm’s future competitive success are important factors in forecasting future revenue and inancial statements. An analyst can evaluate the competitive position of a company based on Porter’s ive forces:
- Companies have less (more) pricing power when the threat of substitute products is high (low) and switching costs are low (high).
- Companies have less (more) pricing power when the intensity of industry rivalry is high (low).
- Pressure on input costs is higher when the bargaining power of suppliers is high.
- Companies have less pricing power when the bargaining power of customers is high.
- Companies have more pricing power when the threat of new entrants is low.
Increases in input costs will increase COGS unless the company........
has hedged the risk of input price increases with derivatives or contracts for future delivery
For highly cyclical companies, the forecast horizon should include ......... so that the analyst can forecast normalized earnings.
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For a buy-side analyst, the appropriate forecast horizon to use may be the .........
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