Using the Bloomberg Machine

Professor Crocker H. Liu, NYU
Investment Principles
Revised: September 2, 1998 Using the Bloomberg Machine for Security Analysis: A Primer

Before beginning: Since the underlying source of most of the financial data reported on Bloomberg are the company’s various financial reports such as the 10K and 10Q, you should refer back to these documents for specific details of what's included in Bloomberg's aggregated categories e.g. what exactly is included in the category Short Term Borrowing?

Keys on Bloomberg
Bloomberg contains a large portion of the information that you need to analyze your company. As a prelude to using the Bloomberg machine, first observe that Bloomberg has several different types of color coded keys. The keys of interest are the following

The EQTY key is used to get information on the equity of a company. Similarly, the yellow DEBT and PFD keys are associated with accessing information about a firm's outstanding debt and preferred stock respectively. The GOVT key is used to get information about government securities such as Treasury bills and bonds. The INDEX key, in contrast, is used to obtain information about an index such as the Standard and Poor's 500 (SPX).

The green GO key is analogous to the Enter key on your computer keyboard. PAGE FWD and PAGE BACK similarly are akin to the Page Up and Page Down keys on your computer keyboard and are used to scroll through pages of data in a subdirectory. The MENU key is used to retrace your steps back to the original directory e.g., if you are in the earnings subdirectory and wish to go back to the main directory for a stock, press the MENU key. Use the PRINT key to print the current screen.

Getting Started
To obtain information about a company, you will need its ticker symbol. To obtain the ticker, press the keys

You will be given a series of choices. Choose 1) Finding Securities by typing the number 1 followed by pressing the green GO key. Type the first couple of letters of the name of the firm and press the green GO key. Use the PAGE FWD key if there are multiple pages. To get out of this directory, press the MENU key. Warning: Make sure that your ticker is that for the US since some of the larger companies are dual listed e.g. trade on several exchanges.

If you already know your ticker (you can, for example, go to www.wsrn.com to obtain the ticker for your stock) type the name of your ticker followed by pressing the yellow EQTY key and then the green GO key. For example, the ticker for Coke is KO. Thus, if we wish to obtain equity information on Coca-Cola, we would type the following

Alternatively, instead of using the keys, simply type KO EQTY and press the GO key.

Equity Information
Once you have entered the appropriate company's page on Bloomberg, you are presented with the following menu.

1) Today's Markets - Quotes & Recaps
2) Company Information/Descriptions
3) Intraday Technicals/Graphs
4) Historical Prices
5) Historical Technicals/Graphs
6) Options, Warrants & Convertibles
7) News/Research
8) Ticket Writing & Holders/Holdings
9) Fundamentals & Earnings Analysis
10) Relative Performance/Total Return
11) Risk/Volatility Analysis
12) All Equity Functions

Select the appropriate number by typing it and then press the green GO key. For example, if you wish to obtain news and research about your firm once you have gotten into the equity menu for your firm, type 7 and then press the green GO key.

Part of Project Appropriate Option/Suboption in Bloomberg

Documentation on Ratios and Financial Statements To obtain detailed definitions of the various ratios and what's included in the various categories of the balance sheet, income statement, and cash flow statement, select 16) All Equity Functions by typing 16. Press the TAB key and then type the following in the box: FUNDAMENTAL DOCUMENTATION. Type the number associated with fundamental documental e.g., 1. Select what you want documentation on. To return to the previous menu, press the green MENU key.

Company Overview To obtain an overview of the company select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description.
Use to page through the statistics. Pay particular attention to their breakdown of revenues by geographical location, subsidiaries, etc.
To get news about your firm, select 7) News/Research.

Industry Analysis To find comparable firms to your firm, select 10) Relative Performance/Total Return. In the submenu, choose 8) RV    Relative Value.
To obtain information on the key management personnel including new stories, career history, vital statistics, executive compensation, etc., select 2) Company Information/ Descriptions. Once inside this menu, select the option 2) MGMT Company Management Profiles. To find out more about a particular executive, type the number next to his or her name and then press the green GO key.

Ratio Analysis To obtain ratios for your firm, select 9) Fundamentals & Earnings Analysis. Once inside this menu, select option 1) FA Financial Analysis.

Absolute Valuation
Growth
Estimated Growth Rate

Growth Rate
To find the analysts' estimate of long term growth for your firm, select 9) Fundamentals & Earnings Analysis. Once inside this menu, select option 13) EE   Earnings Estimates.
To find the analysts' estimate of long term growth for the S&P500 (SPX), type
SPX and then choose 9) Fundamentals & Earnings Analysis.

Absolute Valuation
Discount Rate
Cost of Equity/Beta
Market Value of Equity
Cost of Debt
Market Value of Debt
Cost of Preferred
Market Value of Pfd
Cost of Equity:
To find beta, select 11) Risk/Volatility Analysis. Since we use a monthly beta based on 5 years of data, you will need to reset the parameters. Using the Tab key, move the cursor to the date field and change the first date such that you have 5 years worth of data. Leave the ending date as is. Next, move the cursor to the field that asks whether you want to compute beta on a weekly basis. Change W to M for monthly. Press the GO key.
To find the rate on a 10 year Treasury bond, you will need to get out of the Equity menu by pressing

Select 2) Current Markets/Monitors. In this submenu, select 1) PX Govt/Agency Px Menu. In this submenu, select 7) PX7 US Notes/ Bonds 7-15 Years.
Market Value of Equity
To find the market value of equity select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description. Use the number associated with Market Cap. Market Cap stands for market capitalization = price * #shares outstanding.
Cost of Debt:
To find the rating of company's debt
<Ticker>
If it has the word MATRD next to a bond issue, this indicates that the bond has matured. To find the rating for Coke which has the ticker symbol KO, KO To see the details of each debt issue, type the number associated with that debt issue and press the green GO key. For some companies with actively traded bond issues, Bloomberg will report the market price per bond at the top of the page.You will need to multiply this price by 10 to obtain the price per bond. The number of bonds issued is also given (note: disregard the M next to the number of bonds issed... use the amount of bonds reported as is). To obtain the Market Value of Debt for a particular issue, multiple the price per bond by the number of bonds issued. If you are unfamiliar with the various bond terms, please visit the Data Glossary section of Bridge Fixed Income Services's website.

To find new issues with similar ratings and select 7) New Issues/Calendars/Corp Actions . Go into New Issues Monitor and look at options 1) U.S. Bond Market and 3) U.S. Corporates.
If there are no new issues that are normal (straight debt) for your firm's rating, go to Bridge Fixed Income Services and use the Bridge Evaluator spreads given in basis points (bps where 100 bps = 1%). Next, add on the current 10 year Treasury bond rate from the Bloomberg machine or the Bloomberg website.
Cost of Debt = 10 Year Treasury Bond + Spread associated with appropriate     rating for your firm
Market Value of Debt:
If a particular bond isn't traded, follow the preceding directions on the Cost of Debt to obtain the remaining payments on the bond. Use of the cost of debt as the discount rate and do the present value calculations. For Coke,
KO To see the payments associated with each debt issue, type the number associated with that debt issue and press the green GO key. Once in theparticular debt's menu, select 3) Security Valuation/Cashflow and then in the submenu, select 8) CSHF   Bond Payment Schedule. To obtain the present value of the payments, use the Tab key and change the Display from C (cashflow) to P for present value. Next, use the Tab key and put in the appropriate discount rate (cost of debt) that you obtained above.
Cost and Market Value of Preferred Stock::
The procedure is similar to that for equity and debt except the yellow PFD is used
<Ticker>

Absolute Valuation
Cash Flows
Financial Statements
Financial Statements
To find the balance sheet, income statement, and/or cash flow statement for your firm, select 9) Fundamentals & Earnings Analysis. In the Fundamentals & Earnings Analysis submenu, select the appropriate option:
3) CH2   Income Statement
4) CH3   Balance Sheet
6) CH6   Cash Flow Statement (Select appropriate subdirectory)
The default for the various financial statements is yearly. To change to quarterly statements, use the Tab key and replace Y with Q.

Relative Valuation To calculate the relative value ratios, access the financial statements of your company and its competitors using the preceding instructions. To see the calculated relative value ratios on Bloomberg for your firm, select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description. The ratios should be on either the 3rd or 4th page.
Caution: Not all of the relative valuation ratios are given. For some of the ratios, the definitions vary from those that we will be using.

Technical Analysis To look at moving average and relative strength charts for your company, select 5) Historical Technicals/Graphs.
To obtain historical prices, select 4) Historical Prices. After printing the historical prices, use the scanner with OCR software and download into an Excel spreadsheet.

Part of Project	Appropriate Option/Suboption in Bloomberg
Documentation on Ratios and Financial Statements	To obtain detailed definitions of the various ratios and what's included in the various categories of the balance sheet, income statement, and cash flow statement, select 16) All Equity Functions by typing 16. Press the TAB key and then type the following in the box: FUNDAMENTAL DOCUMENTATION. Type the number associated with fundamental documental e.g., 1. Select what you want documentation on. To return to the previous menu, press the green MENU key.
Company Overview	To obtain an overview of the company select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description. Use to page through the statistics. Pay particular attention to their breakdown of revenues by geographical location, subsidiaries, etc. To get news about your firm, select 7) News/Research.
Industry Analysis	To find comparable firms to your firm, select 10) Relative Performance/Total Return. In the submenu, choose 8) RV Relative Value. To obtain information on the key management personnel including new stories, career history, vital statistics, executive compensation, etc., select 2) Company Information/ Descriptions. Once inside this menu, select the option 2) MGMT Company Management Profiles. To find out more about a particular executive, type the number next to his or her name and then press the green GO key.
Ratio Analysis	To obtain ratios for your firm, select 9) Fundamentals & Earnings Analysis. Once inside this menu, select option 1) FA Financial Analysis.
Absolute Valuation *Growth* Estimated Growth Rate	Growth Rate To find the analysts' estimate of long term growth for your firm, select 9) Fundamentals & Earnings Analysis. Once inside this menu, select option 13) EE Earnings Estimates. To find the analysts' estimate of long term growth for the S&P500 (SPX), type SPX and then choose 9) Fundamentals & Earnings Analysis.
Absolute Valuation *Discount Rate* Cost of Equity/Beta Market Value of Equity Cost of Debt Market Value of Debt Cost of Preferred Market Value of Pfd	Cost of Equity: To find beta, select 11) Risk/Volatility Analysis. Since we use a monthly beta based on 5 years of data, you will need to reset the parameters. Using the Tab key, move the cursor to the date field and change the first date such that you have 5 years worth of data. Leave the ending date as is. Next, move the cursor to the field that asks whether you want to compute beta on a weekly basis. Change W to M for monthly. Press the GO key. To find the rate on a 10 year Treasury bond, you will need to get out of the Equity menu by pressing Select 2) Current Markets/Monitors. In this submenu, select 1) PX Govt/Agency Px Menu. In this submenu, select 7) PX7 US Notes/ Bonds 7-15 Years. Market Value of Equity To find the market value of equity select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description. Use the number associated with Market Cap. Market Cap stands for market capitalization = price * #shares outstanding. Cost of Debt: To find the rating of company's debt <Ticker> If it has the word MATRD next to a bond issue, this indicates that the bond has matured. To find the rating for Coke which has the ticker symbol KO, KO To see the details of each debt issue, type the number associated with that debt issue and press the green GO key. For some companies with actively traded bond issues, Bloomberg will report the market price per bond at the top of the page.You will need to multiply this price by 10 to obtain the price per bond. The number of bonds issued is also given (note: disregard the M next to the number of bonds issed... use the amount of bonds reported as is). To obtain the Market Value of Debt for a particular issue, multiple the price per bond by the number of bonds issued. If you are unfamiliar with the various bond terms, please visit the Data Glossary section of Bridge Fixed Income Services's website. To find new issues with similar ratings and select 7) New Issues/Calendars/Corp Actions . Go into New Issues Monitor and look at options 1) U.S. Bond Market and 3) U.S. Corporates. If there are no new issues that are normal (straight debt) for your firm's rating, go to Bridge Fixed Income Services and use the Bridge Evaluator spreads given in basis points (bps where 100 bps = 1%). Next, add on the current 10 year Treasury bond rate from the Bloomberg machine or the Bloomberg website. Cost of Debt = 10 Year Treasury Bond + Spread associated with appropriate rating for your firm Market Value of Debt: If a particular bond isn't traded, follow the preceding directions on the Cost of Debt to obtain the remaining payments on the bond. Use of the cost of debt as the discount rate and do the present value calculations. For Coke, KO To see the payments associated with each debt issue, type the number associated with that debt issue and press the green GO key. Once in theparticular debt's menu, select 3) Security Valuation/Cashflow and then in the submenu, select 8) CSHF Bond Payment Schedule. To obtain the present value of the payments, use the Tab key and change the Display from C (cashflow) to P for present value. Next, use the Tab key and put in the appropriate discount rate (cost of debt) that you obtained above. Cost and Market Value of Preferred Stock:: The procedure is similar to that for equity and debt except the yellow PFD is used <Ticker>
Absolute Valuation *Cash Flows* Financial Statements	Financial Statements To find the balance sheet, income statement, and/or cash flow statement for your firm, select 9) Fundamentals & Earnings Analysis. In the Fundamentals & Earnings Analysis submenu, select the appropriate option: 3) CH2 Income Statement 4) CH3 Balance Sheet 6) CH6 Cash Flow Statement (Select appropriate subdirectory) The default for the various financial statements is yearly. To change to quarterly statements, use the Tab key and replace Y with Q.
Relative Valuation	To calculate the relative value ratios, access the financial statements of your company and its competitors using the preceding instructions. To see the calculated relative value ratios on Bloomberg for your firm, select 2) Company Information/ Descriptions. Once inside this menu, select the option 1) DES Description. The ratios should be on either the 3rd or 4th page. Caution: Not all of the relative valuation ratios are given. For some of the ratios, the definitions vary from those that we will be using.
Technical Analysis	To look at moving average and relative strength charts for your company, select 5) Historical Technicals/Graphs. To obtain historical prices, select 4) Historical Prices. After printing the historical prices, use the scanner with OCR software and download into an Excel spreadsheet.