New Official NAIC Software Screens Online Data
NAIC members know the value of doing their own research. The new NAIC Stock Prospector helps self-directed investors unearth great stocks for study.
NAIC Stock Prospector is the brand-new official NAIC software for screening company datafiles. The software allows you to search NAIC’s Online Premium Services (OPS) datafiles to find companies that fit the profile you’re looking for.
Say, for instance, you’re interested in finding a company with a solid history of earnings growth and an aggressive development strategy. In just a few easy steps, NAIC Stock Prospector determines what sort of company you want. Then, in the blink of an eye, it searches the entire OPS database, including virtually all stocks publicly traded on North America exchanges. Within seconds, you’ll have a list of stocks that fit your criteria, and with a click of the mouse, you can open either a mini SSG or an NAIC stock analysis program to do a full study on the company.
Benefits of NAIC Stock Prospector include:
Quick & easy data import from OPS datafiles
Over 10,000 company datafiles updated daily
Prospector Wizard takes beginners step-by-step
Options for pre-defined ad weighted screens.
Pro mode allows powerful customization, including individual weighting and ranking of criteria and customizable reports.
Search on up to 120 criteria
Mini-SSG graphs with 20 different financial criteria help you to see at a glance whether you want to pursue a stock study
For a limited time, NAIC members may purchase NAIC Stock Prospector for just $49, plus $5 S&H. Order by calling NAIC toll-free at 1-877-ASK-NAIC, ext 0 or online at www.iclub.com/prospector/buy.
NAIC now offers its members an Internet-based company data subscription service. This Online Premium Services (OPS) data can be a wonderful timesaver and is very reasonably priced. Please see NAIC's web site to subscribe and start enjoying easy access to detailed data on over 10,000 companies.
ICLUBcentral has been hard at work integrating this new database system into its investing software program. First, we released NAIC Classic Plus, which pulls OPS data right into the SSG. Our latest release is a new version of our stock screening software, now called NAIC Stock Prospector. (See above for details.)
Let me take you through the steps to download the OPS data and screen companies for growth characteristics. I will also give you a few tips about viewing the results.
Once you have signed up for OPS and have your password, open NAIC Stock Prospector and click the 'Import' icon. Type in your email address and password and then click 'Start Import'. This will load all the company files into your program and create an NAIC Stock Prospector database. On a fast connection, this takes about 15 seconds for 10,000+ companies, including industry averages!
Now you are ready to start screening. Click the Wizard icon for the fastest results. Follow the 'Next' buttons within the pop-up windows. Highlight 'Growth companies' for the type of screen. Then click the 'Finish' button to view a list of companies screened for growth, according to the growth criteria provided by the Wizard.
The company list will be sorted by 'Weighted ranking' (overall best to worst). You may also elect to sort by any of the other column criteria--simply click on the column header for ascending/descending sorts.
When viewing the grid of companies it is helpful to lock the company name column. This holds it constant while you look across the columns using the scroll bar. To lock the column, point your cursor to the company name column and right-click for the menu list. Select 'Lock leftmost columns up to company name'.
Also remember to view the comparative information in the top three lines of the company grid. This shows the minimum, average, and maximum values for each criteria item (calculated from the screened companies' data). Use these values to compare companies of interest to their peers in the list.
To see a mini-SSG and detailed data for each company, double-click on the company. From the company window you may scroll through all the companies using the arrow icons. Extra Tip: You may also use this company window to search for a particular company within the OPS data source. Simply type in the company name or symbol and press 'Enter'.
Click the 'Rank' icon within the company window to compare graphically the company's strengths and weaknesses with the rest of the companies ranked.
The final step is to move the companies you found interesting into your NAIC investing software to analyze them using the Stock Selection Guide. (We recommend you use NAIC Classic Plus or Stock Analyst Plus for this.)
From the screened company list in NAIC Stock Prospector, you can quickly load a company by highlighting the company's name and right-clicking. From the menu, select 'Open - [Company name] - SSG file' and follow the prompts. This will immediately start your SSG software and open the company data in an SSG, ready for your analysis.
If you're using Stock Analyst Plus, you may import multiple companies at once. From the menu line, select 'File / Export records to Stock Analyst Plus' and then highlight the companies you wish to export. Double-click to select the directory where you wish to save the files. Then check the boxes for 'Export in long format' and 'Have Stock Analyst Plus Import companies'. When you have Stock Analyst Plus open, click 'File / Import / Import NAIC data' to import the list of companies.
The power of NAIC Stock Prospector has been greatly enhanced by OPS data, so you can now find great companies more quickly and more easily!
Special Series (Part III): The Statement of Cash Flows (Cash is King)
by Jeff Hakala, CFA, CPA
The first two articles in this series introduced the Balance Sheet and Income Statement, each on a stand-alone basis. This article will describe how the Cash Flow Statement is created using data from both of these financial statements.
What is a cash flow statement? What does it communicate to the reader of a financial statement?
A cash flow statement is an analytical report prepared at the end of a period. It reports a company's cash inflows and outflows. There are two ways to prepare a statement of cash flow--the indirect method and the direct method. Generally Accepted Accounting Practices (GAAP) require that if a company uses the direct method for its annual report, they must also provide a supplemental Indirect Statement of Cash Flow with their report. Few companies report the direct statement of cash flow because of this rule, and so we will concentrate on the Indirect Statement. In the United States, companies issue statements of cash flow at the end of each quarter and at the end of each fiscal year (10K). You will recall that a 10Q is the quarterly income statement and that balance sheets can be provided quarterly as well.
The cash flow statement is created by the interaction of information from the balance sheet, income statement and footnotes. Footnotes are disclosures in the back of an annual report. They typically provide additional detail and support regarding a company's financial statements. Both the balance sheet and income statement are comprised of accounts that are impacted during a period by journal entries. A journal entry is the recording of a transaction into the financial records that ultimately in aggregate become the income statement and balance sheet. For example, an inventory purchase would impact the inventory account and accounts payable (assuming that the purchase was on account). Both of these accounts are balance sheet items, so this transaction would impact the balance sheet only.
The beginning cash balance on the cash flow statement will agree with the cash balance on the balance sheet at the beginning of the period. The ending cash balance on the cash flow statement will agree with the ending cash balance on the balance sheet.
There are three sections on an Indirect Statement of Cash Flow that segregate and classify cash flow. They are the following:
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Operating Cash Flow - Measures cash flows provided or used from the sale of goods and services. There are two components to this section. The first part is driven from the income statement and the second component is impacted from the balance sheet.
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Investing Cash Flow - Measures cash flows provided or used from the sale or acquisition of fixed assets such as property, plant and equipment. Acquisitions of companies or divestures of part of the company are also recorded in this section of the statement.
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Financing Cash Flow - Measures cash flows provided or used from the issuance or retirement of equity or debt securities.
The statement of cash flow in an annual report is a crucial document to review and understand. The report dissects the change in the cash balance and helps one understand why it changed. Examples of what one can learn from a statement are:
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Free Cash Flow - The operating cash flow less any new property plant and equipment purchased during the period. A rapid growing capital-intensive (requiring a lot of fixed assets to generate more revenues) company will tend to operate at a negative free cash flow during rapid growth periods. A way to assess whether a company is growing its capacity rapidly is by dividing capital expenditures by deprecation. Both of these numbers can be found on the cash flow statement.
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If a company is using cash on a free cash flow basis, one can learn how is it being financed.
Essential Takeaways
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Cash is King - Investors should seek companies that can grow earnings and ultimately convert its earnings into positive cash flow.
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Free Cash Flow - the cash that remains after operating the business over a period of time and after replacing and adding new capacity. If one is operating a negative free cash flow, how is the company funding its deficit?
Several readers have asked where they can find more information on the topic of financial statements and annual reports. One source I'd recommmend is The Analysis and Use of Financial Statements, 2nd Edition by Gerald White, Ashwinpaul Sondhi and Dov Fried.
Jeffrey A. Hakala, CFA, CPA is a professional portfolio manager and security analyst with Seger-Elvekrog Inc. Jeff can be reached via e-mail at jhakala@seger-elvekrog.com. Seger-Elvekrog publishes a free monthly email newsletter. For more information, please email Dan Krstevski at dan@seger-elvekrog.com.
NAIC's most powerful analytical software, Stock Analyst Plus is the only NAIC Software that enables balance sheet and cash flow analysis.
Order for $99 at 1-877-275-6242, ext 0, or online at
www.iclub.com/saplus/buy.
More information & demo copies available at www.iclub.com/saplus.
ICLUBcentral Visits Western Washington NAIC Fair
NAIC's largest chapter is Puget Sound, and Puget Sound's annual Western Washington Investors & Computer Fair is always quite an event. This year, the two-day investing education extravaganza offers a wealth of opportunities for investors to learn. The program for Friday, November 15 centers on investment seminars and computer-aided investing, while the schedule for Saturday, November 16 features a stellar line-up of corporate presentations. Teaching seminars and answering questions will be some of ICLUBcentral's most experienced educators, including Barbara DalMaso, Corry DalMaso, and Rich Beaubien. For a downloadable registration form, please see http://old.better-investing.org/regions/puget-if-registration2002.pdf.
ICLUBcentral frequently accepts invitations from NAIC Chapters to participate in local
events. If your chapter would like an ICLUBcentral representative to attend an investing
or educational fair, please write to
chapters@iclub.com, and we'll do
our best to set something up.
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http://www.iclub.com/clubs/newsletter.asp
Copyright 2002 ICLUBcentral Inc. All rights reserved.
