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Learn/The earnings model in depth

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Learn The earnings model in depth

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B Basic

How a research model is laid out8m
Revenue builds by business typePro10m
Costs and operating leveragePro9m
Below the line to EPSPro8m

A Advanced

The earnings preview and the printPro10m
Guidance and the StreetPro9m
Cash flow and the balance sheet in the modelPro9m
Scenarios and sensitivitiesPro9m

FlashcardsPro0/17
Basic quizPro80% passes
Advanced quizPro80% passes
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The earnings model in depth

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of 8 lessons: 0
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Flashcards Start the first lesson

How a research model is laid out, how revenue is built for different kinds of companies, how costs turn growth into EPS, and how the model is updated on the night of a print.

BBasic4 lessons

1How a research model is laid outA sell side model runs by quarter, by segment, from drivers. The layout decides how fast you can update it at 9 p.m. on a print night.8 min
2Revenue builds by business typeProEvery business has its own revenue equation. Picking the right one is most of the modeling skill, and it is what interviewers listen for.10 min
3Costs and operating leverageProRevenue is half the model. How costs behave as revenue moves decides whether EPS grows faster or slower than sales.9 min
4Below the line to EPSProInterest, tax, and share count look like plumbing, but they routinely move EPS by a few percent, and a few percent is a beat or a miss.8 min
Basic quizPro10 questions, 80% passes

AAdvanced4 lessons

5The earnings preview and the printProBefore the print you write down what matters. On the night, a variance table tells you what happened in five minutes, and the model update follows a fixed order.10 min
6Guidance and the StreetProGuidance anchors consensus, and each management team has a habit: some guide low and beat, others guide to the number. Knowing the habit is part of the model.9 min
7Cash flow and the balance sheet in the modelProEarnings models used to stop at EPS. Investors now ask about free cash flow, net debt, and how buybacks are funded, so the model has to carry them.9 min
8Scenarios and sensitivitiesProA base case is one guess. Sensitivities show which driver moves EPS most, and scenarios turn that into a range a portfolio manager can size against.9 min
Advanced quizPro10 questions, 80% passes