Income 2. One-time income and expenses 3. Income from unspecified sources 4. Items in income statement that are volatile Tax Rate 1. Income from multiple locales 2. Different tax and reporting books 3. Headquarters in tax havens 4. Volatile effective tax rate Capital 1. Volatile capital expenditures Expenditures 2. Frequent and large acquisitions 3. Stock payment for acquisitions and investments Working 1. Unspecified current assets and capital current liabilities 2. Volatile working capital items Expected 1. Off-balance sheet assets and Growth rate liabilities (operating leases and R&D) 2. Substantial stock buybacks 3. Changing return on capital over time 4. Unsustainably high return Cost of 1. Multiple businesses capital 2. Operations in emerging markets 3. Is the debt market traded? 4. Does the company have a rating? 5. Does the company have off- balance sheet debt? Your inputs Follow-up Question Answer Complexity score Number of businesses (with more than 10% of revenues) =2 4 Percent of operating income = 20% 1 Percent of operating income = 15% 0.75 Percent of operating income = 5% 0.25 Percent of revenues from non-domestic locales = 100% 3 Yes or No Yes 3 Yes or No Yes 3 Yes or No Yes 2 Yes or No Yes 2 Yes or No Yes 4 Yes or No Yes 4 Yes or No Yes 3 Yes or No Yes 2 Yes or No Yes 3 Yes or No Yes 3 Is your return on capital volatile? Yes 5 Is your firm's ROC much higher than industry average? Yes 5 Number of businesses (more than 10% of revenues) = 2 2 Percent of revenues= 30% 1.5 Yes or No Yes 0 Yes or No Yes 0
Danasiri Ratnaweera Pushpa Ratnaweera v. Federal Deposit Insurance Corporation John Stafford, Managing Agent of Rtc, in Its Capacities Sued Herein and His Successor in Office Imperial Federal Savings Association, a Federal Savings Association Imperial Savings Association, a California Corporation an Van Duong Churchill Service Corporation First Line Mortgage, Inc. Ticor Title Insurance Company Gateway Title Company, 82 F.3d 423, 1st Cir. (1996)