Value investing and financial statement analysis

• Autor(a) principal: Magalhães, Mauro Miguel Cortes
• Data de Publicação: 2014
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/9907
• topic: Value investing; Margin of safety; Intrinsic value; Caterpillar financial analysis; Benjamin Graham; Warren Buffet; Investimento; Margem de segurança; Valor intrinseco

The following study is based on a deep research into the roots of value investing and its essences – Intrinsic Value. The entire philosophy will be based in the simple concept of Margin of Safety developed by Benjamin Graham. During the development of this concept there will be presented the most important concepts of this strategy. Throughout this study, it will also be analysed the market as well as investors’ tendencies and demonstrated that value investing is not based on tendencies and predictions. It will show that Price and Value of securities are the most important variables in taking investment decisions and also study the good investor behaviour and its importance in investing. It will be established the difference between efficient and inefficient markets and concluded that value investing is a long term investment based on inefficient markets theory. The limits of value investing will also be approached in this study. To get profit from the market is not always possible and it depends a lot from many factors, either way, an investor should be defensive, conservative, not greedy and finally, rigorous and disciplined. Finally, this study will reveal a personal view on the most important steps in order to make good financial decisions and examine and analyse Caterpillar’s five years financial statements through the Value Investing method, focusing on six kinds of financial ratios (key indicators, short term indicators, long term indicators, profitability indicators, liquidity indicators and price multiples).