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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (45954)	8/29/2001 9:48:28 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 54805

Chaz - restating, yes, that was gobbledygook... sorry. I suggested (or meant to suggest) that rather than look at the change in Book Value per Share, to watch the change in ratio between asset classes that book value rests on. Particularly when trying to establish a value for a company. In still more words, when book value changes, what is changing? Is it the cash hoard that's growing, or goodwill that's growing? And so on: how is the business allocating its assets? This is the purpose of the Balance Sheet disclosure in the 10K and the 10Q, so we might as well use it. Rather than looking at "cash" or "goodwill" as an absolute number, instead I suggest taking each of the figures and dividing by the total assets to get a percentage (alternately, divide each entry by #shares to get a per-share figure) and then watch how these percentages are changing across a number of cycles (yikes, I am suggesting to read and compare multiple 10K's...) This kind of analysis shows up the "quality" of assets that currently underpin the stock you are buying. Plus some insight on the direction that the business has been taking. At least, I suggest this rather than just looking at change in book value per share. Which can be misleading, to put it mildly. John