Financial statement analysis and common stock valuation

Present Value of Free Cash Flow to Equity (FCFE)

The FCFE valuation approach estimates the value of equity as the present value of future FCFE discounted at the required rate of return on equity.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• FCFE Growth Rate (g)

Income Statement
Quarterly Data

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

Price to FCFE (P/FCFE)

Free cash flow to equity is the cash flow available to Vertex Pharmaceuticals Inc. equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to Equity (FCFE)
• P to FCFE Ratio, Current
• P to FCFE Ratio, Historical

Statement of Comprehensive Income

Comprehensive income is the change in equity (net assets) of Vertex Pharmaceuticals Inc. during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

The liabilities and stockholders’ equity reports major classes and amounts of external claims on assets and owners’ capital contributions, and other internally generated sources of capital.

Enterprise Value (EV)

Enterprise value is total company value (the market value of common equity, debt, and preferred equity) minus the value of cash and short-term investments.

• Current EV
• Historical EV

Cash Flow Statement

The cash flow statement provides information about Vertex Pharmaceuticals Inc. cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on Vertex Pharmaceuticals Inc. balance sheet.

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin

An approach to decomposing Vertex Pharmaceuticals Inc. return on equity, return on assets, and net profit margin ratio as the product of other financial ratios.

• Two-Component Disaggregation of ROE
• Three-Component Disaggregation of ROE
• Five-Component Disaggregation of ROE
• Two-Component Disaggregation of ROA
• Four-Component Disaggregation of ROA
• Disaggregation of Net Profit Margin

Common-Size Income Statement

Income statement components (revenues and expenses) shown as percentage of total sales.

Common Stock Valuation Ratios

Relative valuation technique determine the value of Vertex Pharmaceuticals Inc. by comparing it to similar entities (like industry or sector) on the basis of several relative ratios that compare its stock price to relevant variables that affect the stock value, such as earnings, book value, and sales.

• Current Valuation Ratios
• Historical Valuation Ratios (Summary)
• Price to Earnings (P/E)
• Price to Operating Profit (P/OP)
• Price to Sales (P/S)
• Price to Book Value (P/BV)

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

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

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

Dividend Discount Model (DDM)

The dividend discount model (DDM) is a technique for estimating the value of a share of Vertex Pharmaceuticals Inc. common stock issue as the present value of all future dividends.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• Dividend Growth Rate (g)