All public companies provide a forecast for at least the next quarter. Professional analysts spend significant time preparing their own pro-forma forecasts and estimating the EPS for the company. Multiple analysts’ results are then combined to arrive at an “average” that becomes the “analysts’ expectations”. Company’s try very hard to meet the analysts estimate – beating the estimate can make the stock increase in price, but not meeting the expectations by even a few cents may cause the stock price to drop significantly. Remember that its an average – some had it higher, others lower.
Using your company from Week 1 (or choose another)
1. Create a table with the analysts’ expectations from the previous quarter (or period) and the actual results (requires external research).
2. How did they perform? why did they do better or worse than expected? How did this impact their stock price?
3. Add to your table the expected results for the next quarter (or period). Is the forecast aggressive? Where are they making the biggest changes?
CASH CONVERSION CYCLE
1. Using the ratios in the table below, calculate the cash conversion cycle for your company for the past two years
2. How well does your company manage their cash conversion cycle?
RESPOND TO PEERS:
Company is 3M
PEER RESPONSE 2:
Company is ADP