{"id":2590,"date":"2012-08-10T15:40:11","date_gmt":"2012-08-10T19:40:11","guid":{"rendered":"http:\/\/www.credittrends.com\/blog\/?p=2590"},"modified":"2012-08-10T15:43:45","modified_gmt":"2012-08-10T19:43:45","slug":"is-your-investment-advisor-worth-a-hill-of-beans-2","status":"publish","type":"post","link":"https:\/\/www.credittrends.com\/blog\/2012\/08\/10\/is-your-investment-advisor-worth-a-hill-of-beans-2\/","title":{"rendered":"Is your investment advisor worth a hill of beans?"},"content":{"rendered":"

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Ask the following 8 questions:<\/p>\n

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1-Explain, in detail, once you\u2019ve estimated the entity\u2019s free cash flows, how you arrive at the discount rate?<\/p>\n

HINT: It\u2019s not what you learned in grad school or the CFA exam.<\/p>\n

 <\/p>\n

2-Explain, again in detail, all of the adjustments you make to the published financial statements, to arrive at an estimate of free cash flow?<\/p>\n

HINT: Lots of adjustments are required.<\/p>\n

 <\/p>\n

3-How do you define return on invested capital?<\/p>\n

HINT: We\u2019re looking for cash on cash.<\/p>\n

 <\/p>\n

4-How do you define economic profit and when should it be use?<\/p>\n

HINT, Because many companies are not capital intensive<\/p>\n

 <\/p>\n

5-Explain how companies account for (s) derivatives and (b) pensions and other post-employment benefits<\/p>\n

6-How should value be derived?<\/p>\n

HINT: It’s not through relative value, such as a firm’s PE against its peers or some index<\/p>\n

7-How do you account for a firms over-spending or\u00a0under spending?<\/p>\n

8-Have you read “Security Valuation and Risk Analysis?<\/p>\n

HINT: If not, call CT Capital LLC<\/p>\n

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Ask the following 8 questions:   1-Explain, in detail, once you\u2019ve estimated the entity\u2019s free cash flows, how you arrive at the discount rate? HINT: It\u2019s not what you learned in grad school or the CFA exam.   2-Explain, again in detail, all of the adjustments you make to the published financial statements, to arrive […]<\/p>\n

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