Financial statement analysis and common stock valuation

Balance Sheet: Assets
Quarterly Data

The assets reports major classes and amounts of resources owned or controlled by Applied Materials Inc..

Analysis of Solvency Ratios
Quarterly Data

Examines Applied Materials Inc. capital structure in terms of the mix of its financing sources and the ability of the firm to satisfy its longer-term debt and investment obligations.

• Solvency Ratios (Summary)
• Debt to Equity
• Debt to Capital
• Debt to Assets
• Financial Leverage
• Interest Coverage

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity

Liabilities and stockholders’ equity components shown as percentage of total liabilities and stockholders’ equity.

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Analysis of Geographic Areas

Applied Materials Inc. operates in 7 regions: United States; China; Korea; Taiwan; Japan; Europe; and Southeast Asia.

• Area Asset Turnover
• Net revenue
• Long-lived assets

Aggregate Accruals

Financial reporting quality relates to the accuracy with which Applied Materials Inc. reported financial statements reflect its operating performance and to their usefulness for forecasting future cash flows.
Aggregate accruals deriving measures of the accrual component of Applied Materials Inc. earnings.

• Balance-Sheet-Based Accruals Ratio
• Cash-Flow-Statement-Based Accruals Ratio

Analysis of Revenues

• Revenues as Reported

Enterprise Value to FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the Applied Materials Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical

Analysis of Liquidity Ratios

Measures the adequacy of Applied Materials Inc. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Analysis of Debt

• Total Debt (Carrying Amount)
• Total Debt (Fair Value)
• Weighted-average Interest Rate on Debt

Income Statement

The income statement (statement of earnings) reports on the performance of Applied Materials Inc., the result of its operating activities.

Analysis of Short-term (Operating) Activity Ratios
Quarterly Data

Evaluates revenues and output generated by the Applied Materials Inc. assets. Operating performance ratios describe the relationship between the Applied Materials Inc. level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle