Corporate Valuation A Guide for Managers and Investors with Thomson ONE

Name: Corporate Valuation A Guide for Managers and Investors with Thomson ONE
Price: 5.54 USD
Availability: InStock
ISBN: 9780324274288

ISBN-10: 0324274289

ISBN-13: 9780324274288

Edition: 2004

Authors: Phillip R. Daves, Michael C. Ehrhardt, Ron E. Shrieves

List price: $211.95

30 day, 100% satisfaction guarantee!

Marketplace

3 new & used from $5.54

what's this?

Rush Rewards U
Members Receive:

You have reached 400 XP and carrot coins. That is the daily max!

This book has two significant advantages relative to other books and software on the topic of valuation. First, the expository approach of the authors is very user-friendly, with a pedagogy designed to build confidence. They begin with a very simple, but complete example in the first couple of chapters that takes the reader through the valuation of a company. They repeat the analysis for a slightly more complicated company in chapters 3-4. A repeat of the analysis is then completed in chapters 5-8 for an even more complicated company. This iterative approach allows the reader to absorb ?digestible? amounts of material before moving on to the next level of complication. The second pedagogic…

Book details

List price: $211.95
Copyright year: 2004
Publisher: Cengage South-Western
Publication date: 10/7/2003
Binding: Paperback
Pages: 320
Size: 7.50" wide x 9.25" long x 0.50" tall
Weight: 1.078
Language: English

Dr. Phillip R. Daves is Associate Professor of Finance at the University of Tennessee in Knoxville. His research interests encompass health care finance, asset pricing, derivative securities, and dividend policy. He has published papers in THE JOURNAL OF FINANCE, THE INTERNATIONAL JOURNAL OF FINANCE, APPLIED FINANCIAL ECONOMICS, JOURNAL OF FINANCIAL PRACTICE AND EDUCATION, and THE JOURNAL OF FINANCIAL AND STRATEGIC DECISIONS. Dr. Daves' special interests in teaching include health care finance, investments, financial management, and asset pricing--which he teaches at the undergraduate, M.B.A., and Ph.D. levels. Consulting for a range of large and small companies as well as the state of…

Dr. Michael C. Ehrhardt is a Professor in the Finance Department and is the Paul and Beverly Castagna Professor of Investments. He completed his undergraduate work in Civil Engineering at Swarthmore College. After working several years as an engineer, he earned his M.S. in Operations Research and Ph.D. in Finance from the Georgia Institute of Technology. Dr. Ehrhardt has taught extensively at the undergraduate, masters, and doctoral levels in the areas of investments, corporate finance, and capital markets. He has directed and served on numerous dissertation committees and is a member of the team that developed and delivered the integrative first year of the MBA program. Dr. Ehrhardt…



About the Author


Preface



Basic Concepts of Corporate Valuation



Why Corporate Valuation?


Introduction


Our Goals


Our Approach: One Step at a Time


Discounted Cash Flow Techniques


Accounting Skills


Technology Skills


Preview of What's Ahead


Summary



A Complete Corporate Valuation for a Simple Company


Introduction


The Basic Concepts of Valuation


Valuing a Very Simple Company


Investors


The Corporate Valuation Model


The Weighted Average Cost of Capital


Calculating Free Cash Flows


An Overview of Financial Statements


The Balance Sheet


The Income Statement


Calculating Free Cash Flows


Calculating NOPAT


Calculating Operating Capital


Free Cash Flow


Corporate Valuation


Corporate Performance: The Return on Invested Capital


Applications of the Corporate Valuation Model


Mergers and Acquisitions


Value-Based Management


Fundamental Investing


Summary


Spreadsheet Problems



Comparing Bond and Stock Valuation Models with the Corporate Valuation Model


Bond Pricing


The Discounted Dividend Model of Stock Pricing


The Uses of Free Cash Flow



Intermediate Concepts of Corporate Valuation



Financial Statements and Free Cash Flow


Introduction


What Is Cash Flow, Anyway?


When Do You Record It? A "Cruel" Rule


The Balance Sheet


The Income Statement


The Statement of Shareholder's Equity


The Statement of Cash Flows


ACME's Free Cash Flow


Defining Free Cash Flow


ACME's Operating Performance


Summary


Spreadsheet Problems



Reconciling Free Cash Flow with the Statement of Cash Flows



Estimating the Value of ACME


Introduction


The Weighted Average Cost of Capital


Risk and Return


Estimating the Cost of Debt


Estimating the Cost of Common Stock


Estimating the Target Weights


Putting the Pieces Together: Calculating the WACC


Estimating the Future Expected Free Cash Flows


Alternative Valuation Approaches: The Method of Multiples


Summary


Spreadsheet Problems



Security Valuation


The Whole versus the Sum of the Parts


Fundamentals of Security Valuation



Projecting Financial Statements



Projecting Free Cash Flows


Introduction


Requirements for Useful Financial Projections


Van Leer, Inc.


Projecting Financial Statements


Modeling the Financial Statements


Choosing Inputs for the Model


Calculating Free Cash Flow


Summary


Spreadsheet Problems



Projecting Consistent Financial Statements: The Miracle of Accounting


Introduction


Financial Policies and Projecting Financial Statements


Projecting Long-Term Debt and Dividends


Making Balance Sheets Balance: The Plug Approach


Projecting Interest Expense and Interest Income


Completing the Projections: Implementing the Financial Policies


Projecting a Complete Income Statement


Projecting Complete Balance Sheets


Checking Your Projections for Plausibility


Summary


Spreadsheet Problems



Multiyear Projections and Valuation


Introduction


One-Year versus Multiyear Projections


In the Short Run Anything Can Happen. In the Long Run...


Considerations for the Long Run


Projecting Operating Profit


Projecting Operating Capital


Projecting Operating Taxes


Dividend and Debt Ratios


The Projected Statements


Balancing


Checking the Projections


Using Projections for Valuation


Summary


Spreadsheet Problems



Technical Issues in Projecting Financial Statements and Forecasting Financing Needs


Introduction


When Projections Aren't a Percentage of Sales


Linear Model with Intercept


Nonlinear Models


Lumpy Assets


Financial Modeling: Art versus Science


Alternative Financing Policies


Alternative Dividend Policies


Alternative Common Stock Policies


Projecting Interest Expense Based on the Average Debt during the Year


Algebraic Solution to Circularity


Spreadsheet Solution to Circularity


An Illustration Using Van Leer


Summary


Spreadsheet Problems



Valuing Actual Companies with the Corporate Valuation Spreadsheet



The Starting Point for Corporate Valuation: Historical Financial Statements


Introduction


An Overview of the Corporate Valuation Spreadsheet



Get the Actual Historical Financial Statements of a Company



Link the Actual Statements to the Comprehensive Statements



Condensing the Comprehensive Statements



Analyzing the Current and Historical Financial Position of the Company



Estimating the Weighted Average Cost of Capital



Choose the Inputs for Your Projections



Completing the Valuation


Getting Financial Statements from the Internet



Thomson Financial and Thomson ONE-Business School Edition



Edgar



EdgarScan



Yahoo!



Company Web Pages


Mapping Your Financial Statements from the Actual Worksheets into the Comprehensive Worksheet


Income Statement


Balance Sheets


Required Special Items


Optional Special Items


Summary


Spreadsheet Problems



Why We Condense the Financials



The Condensed Financial Statements and Historical Analysis


Introduction


The Condensed Statements


Additional Detail on Operating Performance


Additional Detail on Nonoperating Performance


Adjustments Due to GAAP


Calculating Free Cash Flow


NOPAT Calculation


Free Cash Flow Calculations


Analyzing Home Depot's Past and Present Condition


Analysis of Ratios Required to Project Financial Statements


Analysis of Traditional Ratios as Compared to Competitors


Summary


Spreadsheet Problems



Mapping the Comprehensive Statements to the Condensed Statements: Advanced Issues in Measuring Free Cash Flows


Introduction


Overview of Financial Statement Adjustments and Condensing


Income Statements


Balance Sheets: Current Assets


Balance Sheets: Long-Term Assets


Balance Sheets: Current Liabilities


Balance Sheets: Long-Term Liabilities and Equity


An Explanation of Complicated Accounting and the Impact on FCF


Goodwill


Minority Interests


Investments and Advances


Operating Leases


Pension-Related Liabilities


LIFO Reserves


Foreign Currency Translations


Employee Stock Options


Summary



Estimating the Weighted Average Cost of Capital


Introduction


Estimating the Target Weights


Estimating the Values of the Financing Components


Estimating the Target Weight for Long-Term Debt


Estimating the Target Weight for Short-Term Debt


Estimating the Target Weight for Preferred Stock


Estimating the Target Weight for Common Equity


Estimating the Cost of Long-Term Debt


Estimating the Cost of Short-Term Debt


Estimating the Cost of Preferred Stock


Estimating the Cost of Common Stock


Putting the Pieces Together: Calculating the WACC


Complications and Advanced Issues


Convertible Securities


Privately Held Firms and Divisions


Summary


Spreadsheet Problems



Projecting Cash Flows for an Actual Company: Home Depot


Introduction


A Useful Perspective on Projections


The Mechanics of Projecting the Condensed Statements


Using Fade Rates to Input Forecasted Growth Rates


Using Fade Rates to Forecast Home Depot's Growth Rates


Choosing the Other Inputs Needed to Project Free Cash Flow


Choosing the Inputs to Project NOPAT


Choosing the Inputs to Project Operating Capital


Choosing the Inputs to Calculate Operating Taxes


Choosing Inputs to Complete the Projections


Specifying the Dividend and Capital Structure Policies


Specifying the Nonoperating Items


Specifying Interest Rates


Completing the Inputs


Using Quarterly Data to Improve Your Inputs


Reviewing Your Choices of Inputs


Avoiding an Error in Your First Year's Projections


Spotting Errors


Summary


Spreadsheet Problems



Top-Down Analysis


The Macro Prospective: Global and National


The Industry-Level Perspective


The Firm-Level Point of View



The Valuation of an Actual Company: Home Depot


Introduction


Horizon Value Methods


The Continuing Value Horizon Formula


The Book Value Horizon Formula


The Convergence Value Horizon Formula


The General Value Horizon Formula


The Horizon Value for Home Depot


The Value of Operations for Home Depot


The Half-Year Adjustment


Estimating the Value at Times Other than Fiscal Year-End


The Valuation of Home Depot


Projections of Other Financial Measures


Reverse Engineering/Scenario Analysis


Valuing a Company with a Changing Capital Structure


Summary


Spreadsheet Problems



The Adjusted Present Value Method


Capital Structure and the Value of a Company


Too Much Debt and Bankruptcy Costs


Too Much Debt and Managerial Behavior


Valuation When Debt Is Moderate


The Unlevered Value of Operations


The Value of the Tax Shield


Index