March 10th, 2015, 12:10 pm
Outlook for pricing? (Each dollar of price increase will increase pre-tax income by $1.00 if other costs do not increase.)Outlook for units? (A 10% increase in units will increase gross profits by 10% if the gross profit margin does not change. Pre-tax income will increase by this amount if other costs do not increase.)Outlook for the gross profit margin as a percentage of sales? How much is the gross profit margin expected to increase/decrease as a result of changes in price, mix of business, and (or) specific costs that make up cost of goods sold?Outlook for selling, general and administrative costs/margin as a percentage of sales? Description of any significant Selling, General and Administrative cost changes.Operating leverage: If sales increase by, say, $10 million, how much will drop to pre-tax income?Outlook for the pre tax profit margin? Can the pre tax margin get back to the prior peak margin of _____% attained in ________ year? Can the pre tax margin get to ____% that your competitor, ______________________________, earns?Amount of non recurring, or investment/expansion type expenses included in costs? Net assets tied up in these non-core activities? Core recurring profits?Segment or product line losses included in the consolidated income statement? Net assets tied up in the losses or break-even activities? Core recurring profits? (For example, if the business is a retail chain with 100 stores, what are the total losses of all the stores that lose money and the total profits of all the stores that make money and the net assets tied up in the losers?)After-tax goodwill amortization? (i.e., what is the amount of the tax deductible goodwill amortization and the amount of non-tax deductible goodwill amortization?)Outlook for growth in e.p.s. over the next five years? How will you get the growth/what specifically will you do to get the growth? Return on equity/return on capital goal/outlook over the next five years? How will you get there?Over the next five years, what do you plan to do with the cash that will be generated from earnings and not paid out as a dividend? What investments do you plan to make; such as, new factories, additional stores, acquisitions, share buybacks? What return do you expect to earn on planned investments? (Think of a business like a savings account that reinvests the cash earnings that are kept in the business and not paid out as a dividend. The new cash that is invested can earn a new return that can add to the overall earnings of the business.)Competitive conditions? Expected changes/actions taken by competitors (such as price changes, new products, new capacity, new marketing programs, etc.) And the expected impact on the subject company's pricing, units margin?Amount of costs/expenses that would disappear if the company was consolidated with a competitor (such as corporate expense, overlapping duplicate sales outlets or salespersons, manufacturing costs that would disappear if the company's sales volume was folded into a competitor's factory)? If the separate businesses owned by the subject company were sold, how much of the subject company's corporate expense would disappear? (In other words, would the acquirer's income go up by the amount of segment EBIT that was acquired, or would it have to keep the functions provided by the subject company's "corporate" activity and the related expense?)Rules of thumb/valuation standards such as Price/EBIT (Earnings Before Interest and Taxes), Price/EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), PRICE/Sales, Price/Acre, Price/Board Foot of Timber, PRICE/Ton of Capacity, Price/Salesperson Price/Dollar of Deposits, etc. for similar businesses? What does the company itself think it is worth?Company plans to buy back stock?Have insiders bought or sold stock recently? Describe. Why did he buy? Why did he sell (if the sale was significant)?