I'm intending a series of notes over the next few days, where each one will be focused on specific parts of the SSG in Toolkit, and questions we get on that part. There might not be too much to each note, since what I'm typing up is a list of common shorter questions on each section. I'm hoping that this will help spark a bit of conversation, and fill in some gaps in our knowledge of what folks have always wondered about but never asked. With that in mind, here are some of the more common short questions we get on front page (section 1) of a Toolkit SSG:
Q: How does Toolkit calculate PTP numbers? I don't see where they are input into the Annual Data, and the Quarterly Data numbers do not always add up to the Annual number. Is there a calculation involved using other numbers in the Data page?
A: The data includes annual Net Profit and the Tax Rate. Toolkit calculates pre-tax profit from those (i.e., multiply the net profit by the “not-tax” rate).
The quarterly and annual figures are separate, so they may not add up precisely, because of rounding or because of normalization that is done on the annual figures.
Q: The % Institutions and % Insiders figures add up to more than 100%, is there something wrong with the data?
A: Not necessarily; by Morningstar's standards, any institution that owns more than 5% of a company's stock is also classified as an insider. This means that those two figures can end up higher than 100%.
Q: How does Toolkit figure out Debt to Capital?
A: This is the formula that TK6 uses for the %Debt to Tot. Cap. value:
TotalDebt / (TotalDebt + PreferredStock + (Latest Year Book Value) * CommonIssued) * 100
Q: What is Free Cash Flow?
A: An explanation of Free Cash Flow can be found on our stockcentral.com site at:
http://www.stockcentral..../EntryID/59/Default.aspx
We can also suggest an article by Carol Theine in the Puget Sound Chapter’s newsletter about cash flow analysis basics.
http://pugetsoundbi.org/newsletters/PugetSoundingsSpring_2012.pdf
So again, I'll be posting each day about a different section of the Toolkit ssg. There are five sections, so this will be a week long series. If you have any questions on the front or back page of the SSG in Toolkit, I'll do my best to answer them as I go along.