Crocs, Inc. Case Study Report Essay

Crocs, Inc. Case Study Report Essay
THE GEORGE WASHINGTON UNIVERSITY CROCS, INC. Case Study Report
¹
SUBMITTED TO PROF. NEIL COHEN School of Business and Public Management The George
Washington University
BY Anil Kumar Cheerla
FINA 6224 FINANCIAL MANAGEMENT
WASHINGTON, DC January 26, 2011
Q1: Consider which comparable peers are good matches and use them to perform a multiples
analysis, calculating and defending an estimate of Crocs value. Soln: Comparable companies
analysis – Done to determine appropriate valuation multiple for Crocs, Inc. Selected peer group
based on industry, business and financial characteristics Included explosive growth stocks such as
Lulelemon & Under Armour having similar prospects for growth and ROIC as Crocs, Inc. and some
... Show more content on Helpwriting.net ...
Also past performance is not always reflective of future performance, so any change in the dynamics
will throw off out valuation. The impact of other influential factors such as dividend payout, growth,
discount rate and beta are not considered. The question, Will Crocs maintain such explosive
sustainable growth in the future is subject to high uncertainty and tremendous risk?
Q2: Use the FCF Valuation Template below to modify the analysis in the case, Ex. 6 (incorrectly
labeled Ex. 5), calculating and defending an estimate of Crocs value. Soln: The preferred method to
determine a company's going–concern value by adjusting for risk and time. Simply put, the value of
equity = value of firm – value of debt. So to find the intrinsic or fair values of Crocs, the forecast
numbers from exhibit 6 were plugged into the provided template and appropriate entries from the
balance sheet and income statement were entered. Assumptions: The depreciation and amortization
amounts, capital expenditures were pulled directly from exhibit 6 assuming them to be incremental.
Other assumptions include the discount rate at 10.96%, the long–term growth at 6%, and market
value of debt as zero and no redundant assets. The firm will have perpetual growth after 4 years at a
rate of 6%. The free cash flows along with terminal value calculated are listed below:

Fig4. Free cash flows
The terminal value is calculated as a perpetuity from 2012 and
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Dividend Discount Model
Financial Market Revision
Question 1 Performance Evaluation Calculation Discursive 20% 80% Question 2 Dividend
Valuation Model 45% 55% Question 3 Option strategies Straddles 80% 20% Question 4 Duration
and convexity –Price – yield relationship 30% 70% Question 5 Option and Futures –mixed N/A
100% Question 6 CAPM 40% 60%
Dividend Discount Models 1. The intrinsic value, denoted V0, of a share of stock is defined as the
present value of all cash payments to the investor in the stock, including dividends as well as the
proceeds from the ultimate sale of the stock, discounted at the appropriate risk–adjusted interest rate,
k. Whenever the intrinsic value, or the investor's own estimate of what the stock is really worth,
exceeds the market ... Show more content on Helpwriting.net ...
What is the firm value, assuming no growth opportunities? What is the present value of the firm's
growth opportunities? The risk free rate of return on Treasury bills is 4.8%. The market risk
premium is 6% and Innovation's share beta is 1.2. b) Calculate Innovation's price–earnings ratio and
the price–book ratio (i.e. the ratio of the market value to book value) as of 31 December 2002. c)
What are the advantages and disadvantages of each of the three valuation methods used in (a), and
(b)? d) State whether Innovation's share is overvalued or undervalued as of 31 December 2002.
Support your conclusion using your answers to previous questions and any data provided. The past
10–year average FTSE All Share index relative price–earnings and price–book ratios for Innovation
were 0.4 and 1.12, respectively.
9 a. Dividend Discount Model The oldest discounted cash flow models in

Stock Valuation
LECTURE
STOCK VALUATION 1. Common stock valuation A share of common stock is more difficult to
value in practice than a bond, for at least three reasons. First, with common stock, not even the
promised cash flows are known in a advance. Second, the life of the investment is essentially
forever, since common stock has no maturity. Third, there is no way to easily observe the rate of
return that the market requires. Nonetheless, as we will see, there are cases in which we can come
up with the present value of the future cash flows for a share of stock and thus determine its value.
Cash Flows Imagine that you are considering buying a share of stock today. You plan to sell the
stock in one year. You somehow know that the ... Show more content on Helpwriting.net ...
From Chapter 6 (Example 6.7), we know that the dividend on a share of preferred stock has zero
growth and thus is constant through time. For a zero growth share of common stock, this implies
that: D1 = D2 = D3 = D = constant So, the value of the stock is:
|P0= |
If the dividend grows at a steady rate, then we have replaced the problem of forecasting an infinite
number of future dividends with the problem of coming up with a single growth rate, a considerable
simplification. In this case, if we take D0 to be the dividend just paid and g to be the constant
growth rate, the value of a share of stock can be written as:
|P0= |D1 |+ |D2 |+ |D3 |+... | |
| |(1+R)1 | |(1+R)2 | |(1+R)3 | | |
|= |D0(1+g)1 |+ |D0(1+g)2 |+ |D0(1+g)3 |+... | |
| |(1+R)1 | |(1+R)2 | |(1+R)3 | | |
As long as the growth rate, g, is less than the discount rate, r, the present value of this series of cash
flows can be written very simply as:
|P0= |D0(1+g) |= |D1

Mw Petroleum Essay
Valuation is the estimation of an asset's value, whether real or financial, based on variables
perceived to be related to future investment returns, on comparison with similar assets, or, when
relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010).
Correct valuation of real assets can present challenges to financial analysts. Different models can be
used to arrive at the closest estimate of value and yet certain issues will always arise. This case
attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and
the issues surrounding such, as well as the Black–Scholes Model for Real Options. Questions to be
addressed in the study are:
1. Evaluate Amoco's and ... Show more content on Helpwriting.net ...
Profitability of oil companies declined due to low prices; and most of these firms responded with
cost–cutting measures. Many top companies divested their marginal properties, seeking to
consolidate and rationalize their productive assets– one of which was Amoco Corporation. Amoco
Corporation conducted an extensive review of its cost structure and profitability (p.2), leading to
major restructurings to better focus on its core businesses. The result of this was a divestment of the
middle section of its assets along marginal curve. Morgan Stanley advised and assisted in the
process, creating MW Petroleum Corporation – a new, free–standing exploration and production oil
and gas company. MW was offered to a number of targeted international petroleum concerns, but
the most attractive offer came from Apache Corporation. Apache Corporation was an independent
oil and gas company based in Denver, Colorado engaged in exploration, development, and
production of oil and natural gas. Their strategy, "rationalize and reconfigure" involves acquiring
producing properties whose operations Apache could quickly control and make more efficient,
producing significant cost–saving opportunities for the company. The sale of MW Petroleum
provides such an opportunity for them. However, Apache must first carefully evaluate MW's value
to come up with a proposal that would be attractive for Amoco and profitable for Apache as well.
CRITICAL ANALYSIS
1. Evaluate Amoco's and Apache's corporate

Equity Valuation
INTRODUCTION TO EQUITY VALUATION Equity shares can be described more easily than
fixed income securities. However, they are more difficult to analyse. Fixed income securities
typically have a limited life and a well–defined cash flow stream. Equity shares have neither. While
the basic principles of valuation are the same for fixed income securities as well as equity shares, the
factors of growth and risk create greater complexity in the case of equity shares . As our discussion
of market efficiency suggested, identifying mispriced securities is not easy. Yet there are enough
chinks in the efficient market hypothesis and hence the search for mispriced securities cannot be
dismissed out of hand. Moreover, remember that is ... Show more content on Helpwriting.net ...
All deliveries were completed every Monday or the next working day. The Securities Contracts
(Regulation) Act, 1956 was enacted by the Parliament, passed into Law and the rules were also
framed in 1957. The Act and the Rules were brought into force from 20th February 1957 by the
Government of India. The HSE was first recognized by the Government of India on 29th September
1958 as Securities Regulation Act was made applicable to twin cities of Hyderabad and
Secunderabad from that date. In view of substantial growth in trading activities, and for the yeoman
services rendered by the Exchange, the Exchange was bestowed with permanent recognition with
effect from 29th September 1983.The Exchange has a significant share in achievements of erstwhile
State of Andhra Pradesh to its present state in the matter of Industrial development. OBJECTIVES:
The Exchange was established on 18th October, 1943 with the main objective to create, protect and
develop a healthy capital market in the state of Andhra Pradesh to effectively serve the public and
investors interest. The property, capital and income of the Exchange, as per the Memorandum and
Articles of Association of the Exchange, shall have to be applied solely towards the promotion of
the objects of the exchange. Even in case of dissolution, the surplus funds shall have to be

Tabcorp Valuation
Executive Summary
On 18th October 2010, Tabcorp Holding Limited announced a demerger of its 4.3 billion casino and
wagering business into two separate commercial entities: Echo and New Tabcorp. The term 'New
Tabcorp' in this report refers to Tabcorp Holdings Limited after demerger and 'Old Tabcorp' refers to
Tabcorp Holdings Limited before demerger.
The report offers evidences to prove that the Old Tabcorp was suffering a conglomerate discount and
the demerger has a positive outcome. The first part gives a brief introduction of Tabcorp, including
the background and demerger movements. The second part begins with a PEST analysis of the
gambling industry in Australia which aims at drawing an image of the gambling industry
environment. This ... Show more content on Helpwriting.net ...
The Interactive Gambling Act 2001 was amended in August 2011. It presented the implements of
existing types of forbidden online gambling, and also checked the ability to eliminate harms that
online gambling could bring to consumers.
Economic The Australian gambling market is remarkable in the world's gambling industry. It has
already been mature and showed a very strong growing momentum with 2.9% annually over the last
five years, and it was predicted that the growth rate would be constant in a medium–term period.
(Sudarsanam, 2011)There are four categories of gambling activities. Gaming is the largest type with
the annual turnover over $10.2b, and other three types are Casino, wagering and lotteries, and the
annual turnover was $3.2b, $2.6b and $2.1b respectively. (Sudarsanam, 2011)
Social Although gambling industry can bring more employment opportunities and offer diversified
leisure activities for the public, it could also lead harms. 'Problem Gambling' is the main
disadvantage that gambling produced, it may result in an increasing number of personal bankruptcy,
suicide, crime and child welfare may be ignored and so on (Williams, Rehm & Stevens, 2011).
Hence, the Australian Gaming Council formulated the Responsible Gaming regulation to conduct
the gambling industry in Australia and reduce the existing and potential harms.
Technical As technology has been put into use and thanks to its

Corporate Valuation
Methods of Corporate Valuation Prof. Ian H. Giddy, New York University | What is my company
worth? What are the ratios used by analysts to determine whether a stock is undervalued or
overvalued? How valid is the discounted present value approach? How can one value a company as
a going concern, and how does this change in the context of a potential acquisition, or when the
company faces financial stress? Finding a value for a company is no easy task –– but doing so is an
essential component of effective management. The reason: it's easy to destroy value with ill–judged
acquisitions, investments or financing methods. This article will take readers through the process of
valuing a company, starting with simple financial statements and ... Show more content on
Helpwriting.net ...
Book value is actually somewhat skeptically viewed in this day and age, since most companies have
latitude in valuing their inventory, as well as inflation or deflation of real estate depending on what
tax consequences the company is trying to avoid. However, with financial companies like banks,
consumer loan concerns, brokerages and credit card companies, the book value is extremely
relevant. For instance, in the banking industry, takeovers are often priced based on book value, with
banks or savings & loans being taken over at multiples of between 1.7 to 2.0 times book value.
Another use of shareholder's equity is to determine return on equity , or ROE. Return on equity is a
measure of how much in earnings a company generates in four quarters compared to its
shareholder's equity. It is measured as a percentage. For instance, if XYZ Corp. made a million
dollars in the past year and has a shareholder's equity of ten million, then the ROE is 10%. Some use
ROE as a screen to find companies that can generate large profits with little in the way of capital
investment. Coca Cola, for instance, does not require constant spending to upgrade equipment ––
the syrup–making process does not regularly move ahead by technological leaps and bounds. In fact,
high ROE companies are so attractive to some investors that they will take the ROE and average it
with the expected earnings growth in order to figure out a fair multiple. This is why a

The Pros And Cons Of Selling A Company
Selling a company is the most famous exit strategy for company owners. Sometimes, there aren't
any successors who would like to keep up the company in others, it had been consistently the
company owner's strategy to convert the industry into liquid assets at a specific stage. Regardless of
the reason you want to sell yours, obeying these suggestions for selling a company can help make
certain you receive the best cost and your company sells.
Sell at the right time for the right reasons
For one thing, it's definitely going to be quite hard for you to cope with all the extra worry of selling
a company in those conditions for another, your circumstances will be used by the buyer as leverage
against you.
The ideal time is when you're still hale and ... Show more content on Helpwriting.net ...
Hence whether you have some interest made in running the company, you should be sure that you're
maintaining the company's records updated, the inventory up and the assumptions preserved.
Individuals need to purchase profitable companies, not ignored ones.
You will also prefer to be sure that you've reduced your obligations as much as you possibly can,
doing things like settling any suits and making sure all tax payments are current.
Get professional help when selling a business
Selling a company is an even more sophisticated trade than selling a home and arguably, one that
has even more psychological impact.
**As already mentioned, an expert valuator can discover what your company would be worth.
**A realtor or business broker may be a real godsend when it comes to locating and dealing with
would–be buyers of your industry and enabling you to browse the sales process.
**An attorney can draw up and review the records essential to offer your company, which includes
the record that summarizes your organization for would be buyers along with the sales and purchase
agreement.
One Last Trick for Selling a

How Expensive Are Us Equities?
How Expensive Are US Equities?
I mentioned last week that US P/E multiples were vulnerable to a correction. In the near–term, the
biggest threat is policy tightening by the Fed, while, over the intermediate horizon, rising
inflationary expectations present a potentially bigger threat. Most valuation models are, however,
not robust enough to indicate the precise timing of market adjustments. Against this backdrop, it is
probably too dangerous to place excessive faith in just one single measure. It is, therefore, wiser to
look at a wide range of valuation measures to confirm that equities are mispriced relative to
fundamentals. The Rule of Twenty and the equity market capitalisation to GDP ratio both suggest
that US equities are expensive. ... Show more content on Helpwriting.net ...
What are other valuation measures saying?
Market Capitalisation to GDP Ratio Also High
Equity prices capture investors' perceptions of the future profitability of corporate entities.
Periodically, there can be a disconnection between such expectations and what the real economy can
truly deliver to facilitate corporate profits growth. Over the long run, the boundaries of corporate
performance are firmly imposed by the global economy. In the interim, however, there can be
company/sector specific factors that produce profits growth in excess of the aggregate economy. An
elevated level of stock market capitalisation to GDP is often an indication that investors have
become somewhat too exuberant. In the US, the current level is running at 170%, very close to the
all–time high of 183% in March 2000. This would, therefore, suggest that the US market has
reached vulnerable territory. Valuation measures are not, however, without their critics and three
critiques have been levied against this particular measure. Firstly, the ratio does not supposedly
adjust for the impact of technological innovation on operating margins, as well as lower interest
expenses. Secondly, the geographic origin of US corporate profits is diverse. Nearly 50% of
S&P500 revenues are derived from overseas economies, implying that US GDP is an inappropriate
valuation measurement gauge. Finally, the sector composition of the S&P500 is substantially
different to the real economy. My thoughts on

The Methods That Are Used By The Standard Transactions
D The two methods that are used by the expert include the comparable transactions method, which
uses the multiples in the market to determine the value, and also the DCF method, which is used to
discount the future cash flows back to determine the current value of the shares. Different methods
have different strengths and weaknesses. According to Ross (2009), the comparable transaction
method is used and the strength is that it uses the historical actual transactions that are comparable
to the Woolworths transaction, so that the valuation is justified by the market conditions. In the
meantime, the weakness of the comparable transaction is that different transactions have different
companies involved and the transactions are conducted in ... Show more content on Helpwriting.net
...
For example, in the comparable transaction method, the expert uses the acquisition of Saks and
acquisition of Neiman Marcus as comparable transactions. The methods are correct, as both of these
are retailers. However, it is also important to realize the weakness, which is that these two
companies do not have exactly the same products as David James. Another weakness is that the
number of comparable transactions is too small and the multiples that are used for valuation vary
considerably, so that large discrepancies are generated. The DCF method is a useful method. In this
case the assumptions that are made in the DCF method are reasonable. The DCF also includes many
different scenarios that are used for valuation. However, one of the major weaknesses of this is that
the variation of valuation is very large. Therefore, it is reasonable to believe that although both
methods are good for valuation purposes, the weaknesses generated could impact the accuracy of
the results. The growth rate that is assumed in the DCF valuation is 2.5%, which is reasonable.
According to Ross (2009), the growth rate of 2.5% matches the long–term growth rate of the
Australian economy and therefore it is justified. As the company keeps growing it would finally
reaches its final status. In many situations the company is able to grow as fast as the Australian
economy is able to. Very few industries are able to grow at a faster rate than the whole economy for
very long periods of time. An important

Dell Valuation
Executive Summary SITUATION: Once the largest computer manufacturer in the world, Dell has
slipped to third in line behind Lenovo and HP. With sales of their once famed laptops and PCs
quickly declining, their market share has taken a hit as a result. Lenovo and HP are not only to
blame for Dell's demise, Apple and Google have established new markets for smartphones and
tablets that has shifted demand to these new toys away from laptops/PCs. These new disruptive
technologies are a cheaper and thus more accessible substitute to the old guard (laptops and PCs).
COMPLICATION: With Dell's old core business in rapid free fall and competition eating away at its
margins, Dell shares have plummeted from their all–time highs. As a result any ... Show more
content on Helpwriting.net ...
The 5 year PEG Ratio of Dell is 2.17 versus 1.12 for Lenovo and 1.645 for the industry. It can be
inferred from the Peg Ratio that Dell's EBIDTA growth rate for the next 5 years is going to less than
its peers and the industry. From the ROIC chart shown below, it can be seen that Dell's ROIC has
decreased from 2008 to 2010 and increased in 2011 by about 10%. However, the ROIC is projected
to decrease to 2014 and then remain stable @ 20% for the next 10 years. Based on the APV and
comparable multiples valuation, it can be seen that the future of Dell looks bleak as it stands today.
The Personal Computers (PC) industry is not a great industry to invest in unless you are ready to
innovate and adapt to the changing demands of consumers. Adding this to the fact that consumers
are slowing moving away from PCs to smartphones and tablets makes it a no–brainer for Dell to
make significant changes to its business model as soon as possible DEAL STRUCTURE Dell's 2013
interest coverage ratio has decreased from about 44 in 2011 to 17.6. This trend is a bit of a concern
as the risk of bankruptcy increases with more debt. Dell has about $21.8 billion in liability
obligations and $10.9 billion in excess cash ((Yahoo Finance). At a $13.75 per share, an equity
amount of $3 billion is needed to complete the deal. It is recommended that Michael Dell stays on as
the Chief Executive Officer (CEO) after the LBO deal.

Inventory Valuation
Inventory Valuation
Retailers define inventory as intended sellable assets consisting of goods that are available for resale
to customers. Manufacturers also maintain three components of inventory. These include "finished
goods" which are goods that have been completed and are awaiting sales. Manufacturers may also
have "work in process inventory" made up of goods being manufactured but not yet completed. The
third category of inventory is "raw materials," consisting of goods that are to be used in producing
products. Overall, inventory should include all costs that are both ordinary and necessary to put the
goods in place and in condition for their resale. For many companies, what they have in inventory
represents a major ... Show more content on Helpwriting.net ...
To properly use the cost method in valuing your property, all direct and indirect costs associated
with it must be applied. Some general rules apply to the cost method including that for merchandise
on hand at the beginning of the tax year, cost means the inventory price of the goods. Also, for any
merchandise purchased during the year, cost means the invoice price less discounts plus freight and
other charges occurred in acquiring the goods. For any merchandised produced during the year, cost
means all direct and indirect costs that have to be capitalized under the uniform capitalization rules
(UNICAP). Under UNICAP, you must capitalize the direct costs and partial indirect costs for
production or resale activities subject to these rules. Rather than claiming these costs as a current
deduction, you include them in the basis of property your produce or acquire for resale. You recover
these costs through depreciation, amortization, or cost of goods sold when you use, sell, or dispose
of the property. Under the lower of cost or market method, compare the market value of each item
on hand on the inventory date with its cost and use the lower value of its inventory value. This
method is applied to goods purchased and on hand and basic elements of cost of goods being
manufactured (direct materials, direct labor). This method does not apply to goods accounted for
under the LIFO method. To

Balance Sheet and Value
Learning Goal 6:
Explain the relationships among financial decisions, return, risk, and the firm's value.
1)
Any action taken by the financial manager that increases risk will also increase the required return.
True or False 2)
In common stock valuation, any action taken by the financial manager that increases risk will cause
an increase the required return. True or False 3)
In common stock valuation, any action taken by the financial manager that increases risk will cause
an increase in value. True or False 4)
An action on the part of a firm that increases the level of expected cash flows without a
corresponding increase in risk should reduce share value; An action that reduces the level of
expected cash flows without a ... Show more content on Helpwriting.net ...
True or False 6)
The book value per share of common stock is the amount per share of common stock that would be
received if all of the firm's assets were sold for their accounting value and the proceeds remaining
were divided among common stockholders. True or False 7)
________ is the value of the firm's ownership in the event that all assets are sold for their exact
accounting value and the proceeds remaining after paying all liabilities (including preferred stock)
are divided among common stockholders. A)
Liquidation value B)
Book value C)
The P/E multiple D)
The present value of the common stock 8)
________ is the actual amount each common stockholder would expect to receive if the firm's assets
are sold, creditors and preferred stockholders are repaid, and any remaining money is divided among
the common stockholders. A)
Book value C)
The P/E multiple D)
The present value of the dividends 9)
________ is a guide to the firm's value if it is assumed that investors value the earnings of a given
firm in the same way they do the average firm in the industry. A)
Book value C)

The P/E multiple D)
The

Accounting And Financial Methods And Tools
Firm valuation relates to accounting in that it uses a combination of both accounting and financial
methods and tools. Some of the accounting tools used includes the valuation of firms' assets,
valuation of a firm's profit and loss and also the valuation of a firm's obligations, which are
liabilities. Just like accounting, firm valuation process follows defined steps so as to arrive at the
correct value of the firm that is free from errors. "There are five steps involved; preparation and
planning, adjusting the financial statements, choosing the business valuation methods, applying the
selected valuation method and finally reaching the firm valuation conclusion." (Candon, 78). On the
first step, the most valuable thing is to determine the ... Show more content on Helpwriting.net ...
"After the determination of how and under what conditions of measuring the firm's value, the next
step is the gathering of relevant data and information that impacts the firm value." (Howard, 97).
Such data include; steady earnings above the industry norm, good marketing plans, skilled and
motivated staff, and well documented financial and accounting statements and well detailed business
procedures that are written down.
Some of the gathered data such as the firm's historical financial statements are adjusted so as to
prepare the inputs required for the firm's valuation methods and hence it leads us to the second step.
The main financial statements required for the firm's valuation are the income statement and the
balance sheet that are produced by the accounting process. This further shows the relationship
between firm valuation and accounting. The best way to value a firm with a historical approach
would be looking at the historical statements, income statement and balance sheet. Smaller firms
should be looked at the last three to five years while larger firms should have a longer period to
check. Due to the fact that, business owners have considerable discretion in how they use the firm's
assets and also what expenses and income they recognize, this rise the need to adjust the firm's
historical records. Constructing an accurate relationship between the required firm's assets and

Company Valuation Methods. the Most Common Errors in...
Pablo Fernández. IESE Business School
Company valuation methods. The most common errors in valuations
Company valuation methods. The most common errors in valuations∗
Pablo Fernández PricewaterhouseCoopers Professor of Corporate Finance IESE Business School
Camino del Cerro del Aguila 3. Telephone 34–91–357 08 09. 28023 Madrid, Spain e–mail:
fernandezpa@iese.edu
In this paper, we describe the four main groups comprising the most widely used company valuation
methods: balance sheet–based methods, income statement–based methods, mixed methods, and cash
flow discounting–based methods. The methods that are conceptually "correct" are those based on
cash flow discounting. We will briefly comment on other methods since –even though they ... Show
more content on Helpwriting.net ...
Value should not be confused with price, which is the quantity agreed between the seller and the
buyer in the sale of a company. This difference in a specific company's value may be due to a
multitude of reasons. For example, a large and technologically highly advanced foreign company
wishes to buy a well–known national company in order to gain entry into the local market, using the
reputation of the local brand. In this case, the foreign buyer will only value the brand but not the
plant, machinery, etc. as it has more advanced assets of its own. However, the seller will give a very
high value to its material resources, as they are able to
The reader interested in methods based on value creation measures can see Fernandez (2002,
chapters 1, 13 and 14). The reader interested in valuation using options theory can see Fernandez
(2001c).
1
2
Pablo Fernández. IESE Business School
Company valuation methods. The most common errors in valuations
continue producing. From the buyer's viewpoint, the basic aim is to determine the maximum value it

should be prepared to pay for what the company it wishes to buy is able to contribute. From the
seller's viewpoint, the aim is to ascertain what should be the minimum value at which it should
accept the operation. These are the two figures that face each other across the table in a negotiation
until a price is finally agreed on, which

Case Study : New Flying Machine Advancement Program Essay
They display a procedure to assess adaptable business techniques that depend on genuine
alternatives investigation (ROA) and Monte Carlo reproduction. This strategy is a change over
Black Scholes model on the grounds that their system considers the adaptability that chiefs need to
influence the accomplishment of any given task and, thusly, it gives a superior evaluation of
undertaking worth. To fortify their contention, numerical results are given for a delegate procedure
taking into account a genuine flying machine producer 's information. They fight that speculation
choices in new air ship advancement projects are troublesome due to expansive A fat–followed
dispersion is a likelihood dispersion that has the property that they show to a great degree substantial
skewness or kurtosis. capital uses, long lead times, and numerous specialized and market
vulnerabilities. A more adaptable methodology would exploit the capacity of administrators to fuse
data as vulnerabilities are determined and they propose this as a way to oversee hazard. They utilize
genuine choices examination to assess and manage new flying machine advancement programs
which are outlined through a contextual analysis of a true air ship program. Their examination gives
clear proof that speculators can utilize the numerical consequences of the genuine choices
investigation to decide the amount they ought to spend on a flying machine program, that
administrators can utilize the same results to rebuild the

Tesco Valuation
Aim of the report
The aim of the report is to use different valuation techniques to see if the current share price of
Tesco plc is fair, undervalued or overvalued. Some of the findings will be compared with other firms
in the same industries and share holders will be informed on whether they should buy, hold or sell.
Background information on Tesco
Tesco is the largest supermarket retail chain in the United Kingdom with Sainsbury being their
closest rival. It is also the third largest retail chain in the world. In the beginning Tesco started off by
selling basic groceries before diversifying into many different markets. In 2007 Tesco was operating
in the following fields:
General groceries
Personal banking
Fuel
Telecom ... Show more content on Helpwriting.net ...
There are many other factors that will have a say in a firms share price. All of which can have an
effect on a share price if there is a slight change in their figures or prospects.
Earning Based Valuation
Price to Earnings Ratio (PER) refers to the fact how long a shareholder has to wait to recover the
cost of purchasing the share. PER is directly affected by the market valuation of a share. Tesco has a
PER of 18.1p in the year 2007. This is above the competitor's average PER in the same industry
(appendix 1). Sainsbury has the highest PER but this doesn't suggest they are shares are more
profitable than the other three companies. This suggests they earnings are expected to increase at a
quicker rate than their rivals. Sainsbury PER is high this year but this is because their EPS for prior
years were quite low which meant they were not really profitable in the previous years. Tesco have
had a stable growth when it comes to EPS so their PER has also been stable.
The two problems with using PER are that it is calculated using accounting profits and based on
historical information. Accounting can be biased or even miscalculated which can lead to a wrong
PER figure.
Price to Sales Ratio (PSR)

The And On Startup Valuations
A "How To" on Startup Valuations
Valuations are often referred to as an art, rather than a science. An outsider to the field would
assume that there was one precise way to set the value for a growing company, but in the end it
comes to preference. Each company is different with assets that are unique and not easily compared
to others. At a baseline level, a valuation matters because it "determines the share of the company
[entrepreneurs] have to give away to an investor in exchange for money" (Vital 2013). With billions
of dollars on the line in a valuation, different methods are employed to determine accurate
valuations. Proposed methods can vary based on company type, stage of funding, and many other
characteristics. Bill Payne, long time angel investor, offers four popular methods as a starting point
for startup valuation. These span from the Venture Capital Method in which valuations get their
basis from potential return rates from exit events, the Berkus Method in which monetary standards
are set against the progress a startup has made in commercialization, to the Scorecard Valuation
Process in which the company is compared in a certain region and vertical range based on a set of
characteristics, finally the Risk Factor Summation Method in which characteristics are again
inspected in terms of what is expected in the future (Hudson 2015) .
While in the process of determining companies to fund, Venture Capital firms examine some of
these same characteristics on

Usefulness and Reliability of Information Provided By...
An ongoing concern in financial reporting is the usefulness and reliability of information provided
by corporations. The financial accounting standard board defines usefulness as the information that
is useful for the users in decision making (FASB, 2011). Reliability is inferred when the information
is verified, objective, and can be relied on. Therefore, Statement of Financial Accounting Standards
No. 157 standardizes the valuation and disclosure of fair value for assets and liabilities in order to
achieve both usefulness and reliability. The reasoning for the hierarchy was due to the inconsistency
in previous definitions and guidance (FASB, 1992).
Introduction to Fair Value Hierarchy
To begin, SFAS defines fair value as the value ... Show more content on Helpwriting.net ...
SFAS Relating to the Conceptual Framework
The framework for measuring fair value is easy to understand and follow, and relates to the
conceptual framework. As stated earlier the preferred measure of fair value is the market approach,
because the prices are observable. For this reason the standard recognizes the need for relevant,
reliable, and comparable information in order for users to make better decisions about the current
financial position of a company. Financial readers are aware of the valuing measurement used to
calculate the fair value, whether the measurement were derived from an observable or unobservable
input. The measurement establishes the existence of reliable and relevance qualitative factors that
make accounting information useful for decision making (Barbera, 2007). If it were observable then
the value derived can be researched and verified. However, if it were unobservable then the user
must read the disclosures which will be discussed later in the research paper, and determine the
reliability of the internally generated measurement. In return it can be understood that the level 1
inputs are more reliable and relevant than the other two levels.
In addition, the fair value hierarchy also enhances the comparability and consistency of information
among companies due to following practices: all companies must

Aeropostale Valuation
Executive Summary Since its' inception in 1987, Aéropostale, named after the 1920s French airmail
firm, has become one of the leaders in designing, making and retailing of teen casual apparel and
accessories. Aéropostale stores are primarily located in malls, shopping plazas and large outlet
centers where they can best reach their teen clientele. The company's main competitors include other
clothing brands that cater to teens. Some of these competitors that we considered for Part I of this
analysis were Gap Inc. , Abercrombie, Forever 21, Express Inc., and American Eagle Outfitters.
During our analysis of historical and current financial performance of Aeropostale, we found out
that the main triggers of revenue growth for the company ... Show more content on Helpwriting.net
...
This is because the market will likely eventually become too saturated to sustain 3% growth on the
increasing stores base. Also the effects of the short–run growth drivers will likely taper off after
some years. In the long run, the company may likely have to close more stores than it opens to
maintain its strong store productivity levels. (2) Given the short–run period growth drivers outlined,
especially the impact of the economic recession, store productivity is expected to increase. We have
assumed a ceiling of ~$750 sq.ft; as only very high–end boutique apparel stores have sustained such
productivity levels. From 2014, productivity is forecast to decrease to normal industry average
levels of sales of ~$550 $600/Sq.ft. (3) Average Sq.ft/store is assumed to remain the same over the
forecast period. This assumption appears reasonable since historically the four–year CAGR is
0.43%. 3 (4) The same–store revenue growth rate provided in the 10–Q for 2010 is assumed for
the shortrun; as the company has proven that it can achieve that. However, as the stores base
increases in the long–run, it become harder to sustain this growth rate. Therefore we have assumed a
lower long–run rate; more aligned to more mature companies in the industry. Sensitivity Analysis
Upon conducting the sensitivity analysis (see Exhibit 1), we determined the key factors driving the
valuation:  Discount rate  Tax rate 

Requirements For Accounting Of Business Combinations
1. Exclusions of AASB 3 AASB 3 has defined business and business combination in appendix A as:
A business is an integrated set of activities and assets that is capable of being conducted and
managed for the purpose of providing return in the form of dividends, lower costs or other economic
benefits directly to the investors or other owners, members or participants. A business combination
is a transaction or other event in which an acquirer obtains control of one or more business. AASB 3
applies to all the general form of business combinations but exclusions are:  If the business
combination results in the formation of the joint venture then such business combinations are
exclusions from the scope of AASB 3  If the business combination involves business under
common control then also such business combinations are exclusions from scope of AASB 3  If
the acquisition of assets that do not constitute a business then such combinations are exclusions
from the scope of AASB 3 2. Requirements for Accounting of Business Combinations AASB 3 has
set standard method of accounting for any business combination, which requires application of the
acquisition method and involves the following steps: 1) Identifying the acquirer One of the entities
in business combination must be identified as acquirer where an acquirer is the entity that obtains
the control of acquiree. 2) Determining the acquisition date It is the date at which the acquirer
obtains the control of the acquiree that

Fair Value
Case analysis: Classification of instruments in fair value hierarchy
Instrumental 1
In the case, there was a significant decrease in the volume and activity for the instrument because of
(1) significant widening of the bid–ask spreads in the markets and the widening continued
throughout Q4 2012 (2) a significant decrease in the volume of trades comparing with historical
level in Q4 (3) no recent transactions. According to 820–10–35–54–c, it was reasonable to
determine that market is not active. Because the adjustments were based on management's
assumption, FFC didn't used level 1 inputs in the income approach valuation technique (present
value technique). In addition, significant adjustment inputs includes credit adjustment (level 3 ...
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Then, FFC changed its valuation technique from market approach to income approach (discounted
cash flow model). Most relevant inputs in this model were level 3 inputs, because they were
estimations and assumptions that were not market based. In other words, such inputs were not
observable. So, FFC should classify the ARSs into level 3 of the fair value hierarchy in the fourth
quarter.
Instrument 4
There were no quoted prices available for X' stock, so the measurement did not belong to level 1 of
the Fair Value Hierarchy. In addition, because Most of X's competitors are either privately held or
subsidiaries of larger publicly traded clothing retailers and the shares of the two similar two
companies are thinly traded in an observable market, the market is inactive. FFC also needed some
significant assumptions to forecast its cash flows. These assumptions were level 3 inputs in
accordance with ASC 820–10–55–e. In the case, FFC should use the multiple techniques and weight
more market approach than income approach, because (1) general valuation principle is maximizing
the use of relevant observable inputs and minimizing the use of unobservable inputs (2) sufficient
data could be used to support both the approaches (3) market participants used multiple techniques
to invest similar stock. So, under ASC 820–10–35–37A, FFC should category the investment into
level 3 of the fair value hierarchy, in which the lowest level significant inputs are.

Branson Valuation Essay
–––––––––––––––––––––––––––––––––––––––––––––––––
Business Valuation Report
The Branson Trucking Company As of December 31, 2007 for Dave James
by
Hien Nguyen
Forensic Accounting
Tuesday 5:30–8:30 PM
November 29, 2011
Dear Dave James,
I have been asked to determine the fair market value of Branson Trucking Company as of December
31, 2007 for the purpose of determine your share in the business.
The definition of fair value market value is the price at which the property would change hands
between a willing buyer and willing seller, neither being under compulsion to buy or to sell and both
having reasonable knowledge of all relevant facts.
Based on the information ... Show more content on Helpwriting.net ...
Major companies include Con–Way, JB Hunt, Schneider National, Swift transportation, and YRC
Worldwide. Most employees in the truck transportation and warehousing industry work in small
establishments. Fewer than 5 workers are employed by 62 percent of trucking and warehousing
establishments. Consolidation in the industry has reduced the number of small, specialized firms.
Trucking and warehousing establishments are found throughout the United States. The differential
in growth between the freight industry and the trucking industry could be the factor that pushes
trucking vacancies. The trucking industry has a current growth rate of 1%, while the freight industry
is seeing a 4% growth rate. In addition, federal safety regulations are limiting the work hours for
truck drivers, which results in more employees needed by trucking companies. The combination of
all these things compiled the cost of diesel, spells out higher overall costs for every single trucking
company in the industry. The growth of the freight industry and superior efficiency of railroads will

lead to an even slower growth rate for the trucking industry and could be a cause for more concern
as the trend continues.
––––––––––––––––––––––––––––––––––––––––––––––––– The Asset Approach Adjusted Net
Worth Net Worth as adjusted simply summarizes the net assets and liabilities

CPI: The Stock Valuation
The price/earnings ratio is another means by which a company can be valued. The principle is that
companies of a similar structure, industry and growth rates should have relatively similar valuations
in the market. Price/earnings ratios tend to be higher in bull markets, and lower in bear markets
(Loth, 2012). However, these trends should be roughly the same for all competitors within an
industry, assuming that their risk level is roughly the same. The P/E ratio for Procter & Gamble is
19.70, for Colgate–Palmolive it is 19.93 and the P/E for Unilever ADRs is 21.06. For Johnson &
Johnson it is 17.86. This is a fairly narrow range, and the closer that CPI is to these companies the
closer it should be in terms of its P/E. CPI's price/earnings ratio is 14. The beta for P&G is 0.44, it is
0.43 for Colgate–Palmolive and for Unilever ADRs is 0.78. For Johnson & Johnson it is 0.53 (MSN
Moneycentral, 2012). Some of the disparity for Unilever may be because the company reports in
euros, so there is some translation risk that creates more variability in that stock on the US
exchange. CPI has revenue of $200 million and a regional US presence. This is significantly
different from our competitors. Procter and Gamble has sales of $85.14 billion, Colgate–Palmolive
sales of $16.73 billion, JNJ $65 billion and Unilever $61.12 billion. Additionally, these are global
companies, especially P&G and Unilever. All three have much wider product lines and greater
diversification than does

Improvements in Water Quality
In Malawi the major sources of water for both domestic and industrial use include lakes, rivers and
ground water. Ground water is dependable for supplying water in rural areas and also in some urban
areas even though this source of water is most common in the rural areas. In some urban areas, the
major source of water are rivers. According to Government of Malawi (2010), many river basins are
under severe pressure resulting from deforestation, settlements, climate change, industry, mining,
commerce and unsustainable agriculture. These have consequently impacted negatively on the water
quality mainly due to sediment loads, industrial wastes, chemicals from agriculture and proliferation
of aquatic vegetation. In urban areas, especially areas with high concentration of people, the major
problem has been management of waste disposal. This has resulted in plastics that are just littered
anyhow in the major urban areas including Blantyre ending up in rivers. Ground water though
viewed as one of the safe sources of water, there are also a number of quality issues that are
associated with it. According to Government of Malawi (2010), some of the issues include high
concentrations of minerals such as fluoride, nitrates especially in agricultural areas, manganese and
fecal matter in some areas. All in all, these issues make ground water quality to be degraded too. It is
clear from above that improvements in water quality are no longer evitable. Failure to doing this

Valuation Allowance
05–5 There are two basic principles related to accounting for income taxes, each of which considers
uncertainty through the application of recognition and measurement criteria: * a. To recognize the
estimated taxes payable or refundable on tax returns for the current year as a tax liability or asset *
b. To recognize a deferred tax liability or asset for the estimated future tax effects attributable to
temporary differences and carryforwards.
45–5 The valuation allowance for a particular tax jurisdiction shall be allocated between current and
noncurrent deferred tax assets for that tax jurisdiction on a pro rata basis.
30–22 Examples (not prerequisites) of positive evidence that might support a conclusion that ...
Show more content on Helpwriting.net ...
SUBMIT FEEDBACK SUBMIT ANNOTATION
25–12 Paragraph 740–10–30–18 identifies four sources of taxable income to be considered in
determining the need for and amount of a valuation allowance for those and other deferred tax
assets. One source is future reversals of temporary differences.
30–7 The tax effect of a valuation allowance expected to be necessary for a deferred tax asset at the
end of the year for originating deductible temporary differences and carryforwards during the year
shall be included in the effective tax rate.
> > > Recognition of Deferred Tax Assets and Deferred Tax Liabilities
55–7 Subject to certain specific exceptions identified in paragraph 740–10–25–3, a deferred tax
liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized
for all deductible temporary differences and operating loss and tax creditcarryforwards. A valuation
allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset
will not be realized. See Example 12 (paragraph 740–10–55–120) for an illustration of this
guidance. SUBMIT FEEDBACK SUBMIT ANNOTATION
55–8 To the extent that evidence about one or more sources of taxable income is sufficient to
eliminate any need for a valuation allowance, other sources need not be considered. Detailed
forecasts, projections, or other types of analyses are unnecessary if expected future

Valuation of Integrated Oil & Gas Companies Msc Thesis
MSc Thesis: Valuation of Integrated Oil & Gas Companies
Irakli Menabde
Valuation of Integrated Oil & Gas Companies
A comparative analysis of methodologies and empirical practices
MSc Thesis
MSc in International Business and Economics: Cand. Merc Finance and Strategic Management
(FSM) Copenhagen Business School
Date 09/10/2008 Author: Irakli Menabde
MSc Thesis: Valuation of Integrated Oil & Gas Companies
Irakli Menabde
Abstract
The paper examines a number of empirically utilised and academically established valuation
methodologies in order to value Integrated Oil & Gas Company's common stock. By applying and
comparing DCF, SOP and Real Options based valuation methodologies with the aims of establishing
both, an ... Show more content on Helpwriting.net ...
EMPIRICAL ANALYSIS.......................................................................................................40 4.1
DCF OUTPUT AND DISCUSSION.................................................................................................40
4.1.1 BP Plc DCF Model.......................................................................................................42 4.1.3
DCF Models Robustness Tests.....................................................................................44 4.2 SUM OF
THE PARTS VALUATION ................................................................................................49 4.3
REAL OPTIONS VALUATION.......................................................................................................50
4.4 ECONOMETRIC
TESTS................................................................................................................55 4. CONCLUSIONS

Valuation Reflection
Well this is the last Module for the semester and I am very happy that I was able to make it through
the whole semester. I look forward to using the information I have learn when writing all 15
modules. So, know I will discuss the last Module 15, which targets the company Family Dollar,
which has started to become very popular, because at this store we are able to find everything you
need and cheaper compared to the bigger stores like Wal–Mart and Target. So, let me discuss what
the book discusses on Market Based Valuation. Because Family Dollar is considered to be a
discount store which low and middle–income family are able to find reasonable prices, the funny
thing is that even higher income families shop there too realizing the discount they may find
themselves. Family Dollar has been able to earn an annual revenue for about $8 billion dollars. Even
the revenues have been increasing for the last five years from twenty five percent to about sixty
percent. Here we will learn the valuation techniques using market multiplies, not like the valuation
techniques introduced in the early chapters. I know sometimes it's hard to understand all these
different methods that have been described in the other chapters, but I have been reading it is
making it easier to understand them. Again, like I mentioned earlier, I will try to explain what I
understand from this chapter. Let's start with the first section that talks about valuation model using
the market multiples. When using the

Company Valuation
MASTER IN ECONOMICS OF BANKNG AND FINANCE
MEBF 5th ______________________________________________
SUBJECT: COMPANY VALUATION
CASE STUDY: BIOTECHNOLOGY S.A
Prepared by: Tran Ngoc Minh (MEBF 5th)
Assignment: Company Valuation Case Study: BioTechnology Student: Tran Ngoc Minh – MEBF
5th
TABLE OF CONTENT
I. Introduction of company valuation methods and process........................................................3 1.
Abstract................................................................................................................................3 2.
Valuation methods...............................................................................................................3 2.1
Balance sheets – Based methods ... Show more content on Helpwriting.net ...
The methods for valuing companies can be classified in six groups: MAIN VALUATION
METHODS BALANCE INCOME MIXED CASH FLOW VALUE OPTIONS SHEET
STATEMENT (GOODWILL) DISCOUNTING CREATION .Book value . Multiples Classic Equity
cash flow EVA Black and .Adjusted .PER Union of Dividends Economic Scholes . Sales Free cash
flow Investment value European profit .Liquidation .P/E EBITDAAccounting Capital cash flow
Cash value option value .Other Experts APV added Expand .Substantial multiples Abbreviated
CFROI the project value income Delay the others investment Alternative uses 2.1 Balance sheets –
Based methods (shareholders'Equity) These methods seek to determine the company's value by
estimating the value of its assets. These are traditionally used methods that consider that a
company's value lies basically in its balance sheet. They determine the value from a static
viewpoint, which, therefore, does not take into account the company's possible future evolution or
money's temporary value. Neither do they take into account other factors that also affect the value
such as: the industry's current situation, human resources or organization problems, contracts, etc.
that do not appear in the accounting statements. Some of these methods are the following: Book
value, adjusted book value,

Mergers & Acquisitions: The Case of Microsoft and Nokia...
Mergers & Acquisitions: The Case of Microsoft and Nokia Luís Franco Hilário Advisor: Peter
Tsvetkov Dissertation submitted in partial fulfillment of requirements for the degrees of MSc in
Business Administration, at the Universidade Católica Portuguesa SEPTEMBER 2011 1 Abstract
Due to the financial downturn and the emergence of new devices in the global handset market has
led companies to change their business strategies. Indeed, Mergers and Acquisition are considered
one of the best strategies to increase shareholder value despite its hardship to be well–implemented.
For this reason, a consolidation between Microsoft and Nokia may create new opportunities to
challenge the market. Thereby, the focus of this ... Show more content on Helpwriting.net ...
28 2.3.
Conclusion..................................................................................................................................... 30 3.
INDUSTRY AND COMPANY ANALYSIS ....................................................................31 3.1.
Overview of the Global Mobile Industry ....................................................................................... 31
3.1.1. Current Market Trend – "The emergence of the tablets" .........................................................
37 3.1.2. Technology market growth opportunities in Asian economies
................................................. 38 3.2 Microsoft
Corporation.................................................................................................................... 39 3.2.1.
Windows and Windows Live Division ...................................................................................... 42
3.2.2. Server and Tools ..................................................................................................................... 43
3.2.3. Online Services Division ..........................................................................................................
45 3.2.4. Microsoft Business Division
..................................................................................................... 46 3.2.5. Entertainment and Devices
Division

Advantages And Disadvantages Of The Dividends Discount Model
In this paper, a study on the Dividends Discount Model (DDM) will be explored and explained. The
four main topics that this essay will be based around include what two common share valuation
techniques are used, the dividend discount model and the use of a multiples approach, a discussion
on the relative advantages and disadvantages of dividend discount model and a look into which
model would produce the most accurate results and Why? With the relevant content, research, and
analysis of these specific topics, an understanding of these methods and procedures will be the
overall objective and purpose of this paper.
Formula = Dividend per share Discount rate – Dividend growth rate Dividend discount ... Show
more content on Helpwriting.net ...
The past plays a big part in the future when it comes to dividends, if there has been a strong growth
in dividends in the past then future dividend growth is predicted signaling a strong bottom–line and
profits for the company.
Advantages of the DDM are that it is frequently used when calculating share prices, due to it being
easily taught and its simplicity making it easy to understand. DDM also has the ability to give value
to a company's stock, disregarding the current market making it easy to compare across different
companies and industries big or small. Another advantage is the models rely firmly on theory and
also its ability to stay consistent over the lifetime of the company.
Disadvantages of the DDM include the model itself not appreciating certain factors such as
customer and brand loyalty and the ownership of intangible assets. Factors that are vital towards the
success value of a company. Another disadvantage is the DDM being highly dependent on the
assumption of the company's growth in dividends believing that it's rate is stable and known. DDM
states the fact that stock prices are fragile to the chosen growth rate of dividends, eliminating the
ability for the rate to surpass the cost of equity, which in some cases isn't always

Elounda Company Case Summary
7 (an) (i) Substantive strategies for revaluation of property, plant and hardware (PPE)
– Obtain a calendar of all PPE revalued amid the year and cast to affirm fulfillment and exactness of
the
revaluation conformity and consent to trial adjust and monetary explanations.
– Consider the ability and capacity of the valuer, Martin Dullman, by evaluating through enquiry his
capability, participation of an expert body and involvement in esteeming these sorts of benefits.
– Consider whether the valuation embraced gives adequately target review confirm. Talk about with
administration whether Martin Dullman has any monetary enthusiasm for Elounda Co which
alongside the family
relationship could have affected his freedom.
– Agree the ... Show more content on Helpwriting.net ...
– Enquire of the attorneys of Elounda Co with regards to the presence of suit and claims; if any
exist, then consider their
materiality and effect on the going concern premise.
– Perform review tests in connection to consequent occasions to recognize any things which may
show or alleviate the danger of
going concern not being suitable.
– Review the post year–end board minutes to recognize some other issues which may show
budgetary troubles for the
organization.
– Review post year–end administration records to survey if in accordance with income conjecture

and to distinguish any issues which
might be important to the going concern evaluation.
– Consider whether any extra divulgences as required by IAS 1 Presentation of Financial Statements
in connection to
material vulnerabilities over going concern ought to be put forth in the money related expressions.
– Obtain a composed representation affirming the executives' view that Elounda Co is a going

Valuation Multiples
Valuation & Accounting
Global
November 2001
Valuation Multiples: A Primer
Global
Equity
Research
www.ubswarburg.com/researchweb
In addition to the
UBS Warburg web site our research products are available over third–party systems provided or
serviced by:
Bloomberg, First Call, I/B/E/S, IFIS,
Multex, QUICK and Reuters
UBS Warburg is a business group of UBS AG
Valuation Primer Series
Peter Suozzo
+852–2971 6121
s
peter.suozzo@ubsw.com
Stephen Cooper
+44–20–7568 1962
s
stephen.cooper@ubsw.com

Issue 1
This is the first in a series of primers on fundamental valuation topics such as discounted cash flow,
valuation multiples and cost of capital.
This document explains how to calculate and use ... Show more content on Helpwriting.net ...
We explain how multiples are calculated and discuss the different variations that can be employed.
We discuss the differences between equity and enterprise multiples, show how target or 'fair'
multiples can be derived from underlying value drivers, and discuss the ways multiples can be used
in valuation. For each multiple, we show its calculation and derivation from underlying DCF
fundamentals, discuss its strengths and weaknesses, and suggest appropriate use.
This document will be maintained online and any changes will be posted to our website at
www.ubswarburg.com/research/gvg.
What Is a Multiple?
A valuation multiple is simply an expression of market value relative to a key statistic that is
assumed to relate to that value. To be useful, that statistic – whether earnings, cash flow or some
other measure – must bear a logical relationship to the market value observed; to be seen, in fact, as
the driver of that market value.
Two basic types: enterprise
There are two basic types of multiple – enterprise value and equity:
and equity multiples s s
Enterprise multiples e xpress the value of an entire enterprise – the value of all claims on a business
– relative to a statistic that relates to the entire enterprise, such as sales or EBIT.
Equity multiples, by contrast, express the value of shareholders' claims on the assets and cash flow
of the business. An equity multiple therefore expresses the value of this claim relative

Valuation of Bmw
| Valuation BMW Group | BUSM31 – Strategic Financial Management | 2010–10–27 | Group 14 | |
|
Tutor: Authors:
Måns Kjellsson Daniel Hedevåg Jonas Karlsson Mathias Ljungberg Jakob Tuvehjelm
Background
BMW is one of the ten largest automobile manufacturers in the world, with an annual production of
1.3 million cars (2009). It is furthermore one of the leading manufacturers in the premium car
segment. BMW Group brand portfolio includes in addition to the BMW brand itself the Mini and
Rolls Royce motorcars. The Mini brand is a remain from 1994 when BMW bought Rover and Rolls
Royce was acquired in 1998 after a few years of engine cooperation. Besides the production of
automobiles BMW is a well ... Show more content on Helpwriting.net ...
Worth noticing is how Toyota outperforms most competitors until 2009 when they instead showed
the poorest operating margin. For all compared companies, 2009 is the worst year and only VW and
BMW are able to generate a positive OM. Operating Margin | 2004 | 2005 | 2006 | 2007 | 2008 |
2009 | BMW | 8,4% | 8,1% | 8,3% | 7,5% | 1,7% | 0,6% | Daimler | 2,7% | 1,5% | 1,4% | 7,9% | 5,4% |
–1,9% | Volkswagen | 1,8% | 2,9% | 1,9% | 5,6% | 5,6% | 1,8% | Toyota | 9,6% | 9,0% | 8,9% | 9,3% |
8,6% | –2,2% |
When comparing the Inventory Turnover, Toyota is outstanding in its performance just as known to
be. BMW had the second highest inventory turnover in 2009, which has improved continuously
throughout the measured time (worst in 2004). For Daimler and Volkswagen the trend is instead
negative.
Inventory Turnover | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | BMW | 5,60 | 5,54 | 5,65 | 6,20 | 6,06 |
6,55 | Daimler | 7,22 | 6,86 | 8,80 | 4,73 | 7,82 | 4,41 | Volkswagen | 6,80 | 6,86 | 7,26 | 7,00 | 6,07 |
5,74 | Toyota | 13,14 | 12,51 | 11,62 | 11,21 | 11,82 | 11,28 |
The cash–conversion cycle within the industry is extremely volatile. Toyota, known for its excellent
logistics, has been able to outperform most competitors. For BMW the figure is bleak although
Daimler is in serious trouble with 117 days in its conversion cycle. Cash–conversion–cycle | 2004 |
2005 | 2006 | 2007 | 2008 | 2009 | BMW | 47,20 | 46,46 | 45,63 | 44,60 | 52,18 |

FASB Codificiation Essay
November 3, 2013
Accounting 305
FASB Codification
1. The relevant FASB codification standards are as follows...
1. 350 Intangibles – Goodwill & Other
1.2 20 Goodwill
1.3 35 Subsequent Measurement
1.3.1 Overall Accounting for Goodwill (35.1–3)
1.3.2 Recognition & Measurement of Impairment Loss & Step 1 of the
Qualitative Assessment (35.3A–15)
1.3.4 Determine the Fair Value of a Reporting Unit (35.22–23)
1.3.5 Reporting Unit (35.33–38)
2. 280 Segment Reporting
2.1 10 Overall
2.2 50 Disclosure
2.3.1 Operating Segments (50.1–9)
2.3.2 Aggregation Criteria (50.11A–E)
2. There are several major issues that need to be taken into consideration between ABC's companies,
Dynamic and ZD.
Dynamic:
– It is a publicly ... Show more content on Helpwriting.net ...
If an entity has a recent fair value calculation for a reporting unit, it also should include as a factor in
its consideration the difference between the fair value and the carrying amount in reaching its
conclusion about whether to perform the first step of the goodwill impairment test."
2. Once it is established that the first step of the goodwill impairment test must be completed, the
following steps must be taken according to FASB codification section 350–20–35.4. The first step of
the goodwill impairment test is to, "compare the fair value of a reporting unit with its carrying
amount, including goodwill." The firm needs to complete steps 350–20–35.22–24 to determine its
fair value of its subsidiaries.

The outcomes of the first step of goodwill impairment test will be either that the carrying amount of
the reporting unit is greater than zero, that the carrying amount of the reporting unit is zero or
negative or that the carrying amount of a reporting unit exceeds its fair value.
In the event that the carrying amount of the reporting unit is greater than zero, then the second test
of goodwill impairment is unnecessary according to FASB codification 350–20–35.6. This is
because impairment of goodwill has been found to not be a condition in this result.
In the event that the carrying amount of the reporting unit is zero or negative, then step two is
necessary to

Economic Valuation Of The Negative Externalities...
Environmental Economics
In the last few years, some major travel destinations in Europe have witnessed an increasing social
opposition to crowds of tourists due to the negative environmental and social costs tourism imposes
on locals. The emergence of different citizens' associations in Venice, Barcelona and Mallorca
having a critical attitude towards tourism and aiming to improve the quality of life of
neighbourhoods are a good example. Discuss if the economic valuation of the negative externalities
associated to tourism could play a role in the management of these emerging social conflicts.
Tourism is one of the significant actives showing enormous growth. As a result tourism, many
countries can be seen as an instrument of regional ... Show more content on Helpwriting.net ...
The environment interacts with the economy in four different ways. However, the markets are
unable to register its value. The links created by the implementation of the millennium ecosystem
assessment 2005 building relationships between the economic system and the environment.
Establishing biodiversity as a component of the ecosystem, resulting in the impact of functionality
and service provisions and financial activities. Goods and services provided by the ecosystem
measures through the Pareto efficiency.
Economist decomposed the total economic value by categorising resources into three components:
use value, option value, and nonuse value. Use value reflects the direct use of the support an
example is trees from a forest. Pollution can cause a loss of use value when air pollution increases.
Option value reflects the value people place on the future use of the environment; the willingness to
preserve an option to use the environment in the future though it is currently not utilised. Nonuse
value reflects the observation that people are more willing to pay (WTP) for improving/preserving
resources that they will never use. A true nonuse value is called existence value. An example would
be the protest of dams due to the potential loss of the resource. The amount does not derive from
direct use or possible use,

Basic Financial Concepts and Pinkerton
Executive Summary. Wathen is attempting to value the proposed acquisition of Pinkerton in an
effort to determine whether bids of $85 million to $100 million is value enhancing for CPP's
shareholders. Additionally, Wathen must choose between two financing options: (1) raising $100
Million via a $75 million debt structure at 11.5% interest rate together with a $25 million equity
investment for a 45% stake in the combined company and (2) a $100 million debt facility at 13.5%
interest rate. General Assumption. We assumed that Wackenhut is comparable to Pinkerton, and
therefore that Wackenhut's asset beta reflects that of Pinkerton. Additionally, we assumed that
Pinkerton's bond rating is A. As such, we assumed a debt service ratio for ... Show more content on
Helpwriting.net ...
With the synergies expected, the value to CPP increases by $14.6 Million (see exhibit 4). Generally
for the particular small firms to maintain rating of A, the firms have to maintain a debt service ratio
of 6. Hence it is practical to assume interest coverage ratio of 6.0x in the long term for Pinkerton in
this case. Pinkerton gets benefit from 34% tax shield, which account for the value of $15.4 Million
(see exhibit 5). Therefore, as calculated in exhibit 6, the total value of Pinkerton from 3 sources to
CPP in expected case is $119.7 Million. This is higher than the $100 million asking price.
Financing: Free cash flow after debt service is still positive in both options. For the value to existing
shareholder, as option 1 CPP gives premium of $15.2 Million over $25 Million for 45% stake of
CPP to investors, option 2 of $100 Million Debt would be more preferable. Pessimistic Case
Valuation: We then perform the valuation exactly the same method as expected case. The value of
Pinkerton with less gross margin and more working capital needed is $67.1 Million (See exhibit 9
for 5 years valuation and exhibit 10 for terminal value). With lower performance, the value of 34%
tax shield is also lower to $10.8 Million (see exhibit 12). Without any additional incremental value
to CPP (exhibit 11), total Pinkerton value from 3 sources is $77.9 Million (exhibit 13), which is even
less than the original proposed value of $85 Million from Wathen. Financing:

Property Valuation Essay
In the case of the awareness creation, 63 respondents, which means majority of the households
answered as there was no awareness creation that shows shortcoming on one of procedures of
property valuation in expropriation. According to Tony O'Sullivan (2003), "Housing, which is one of
the major types of real property, is an inherently complex commodity with spatial fixity" for which
many aspects must be taken in to consideration in its valuation and expropriation process. The writer
of this study concluded that people who were expropriated had no chance to discuss the economic,
social, and cultural aspects in the process of expropriation depending on the above majority
response in table(3). In real property appraisal, the objective of ... Show more content on
Helpwriting.net ...
It is known that when there is no consideration of property type, on the other hand, there is no
selection of valuation method. Because, selection of valuation method and identification of property
type mostly go together. Description of the property which is the subject of a valuation report is one
of the scientific procedures of valuation (http://www.iacenig.org/CEthics.html). This is realized from
the fact that for the selection of valuation method, the available data and the type of property
(commercial or residential) plays important role.
IA & CE (2008) says that, "The procedure and method for deciding a given value in question is a
matter for the valuer himself to determine. Nevertheless, better valuation practice needs that the
method selected be right for the purpose, hold consideration of all the factors that have a bearing on
the value, and are presented in a clear and logical way".
There are three major types of property valuation methods and selection of the appropriate method
according to the condition of the property is the most important precondition to reach at the most
accurate value of the property. Regarding this condition, 4(80%) of the expert respondents reacted as
there was no consideration of the alternative method in Gimbi town during expropriation. From this
response, the researcher approved that there was no concept of valuation methods. Here, what
should be understood is that, they use the idea that says current cost or market price as

What Are The Forecasting Needs Of A Seasoned Idea Start...
1. QUESTION: What are the forecasting needs of a seasoned idea start–up and a new idea start up?
Answer: Seasoned idea start–up and New idea start–up need to hold different types forecasting. A
new idea start–up needs a forecasting method based around location, market research, and product
material cost. A seasoned idea start–up requires a forecasting that revolves more around potential
market risk, potential, growth, and comparable products.
2. QUESTION: what are the external forces that we cannot control within a business?
Answer: Factors that we cannot control within a business is better known as External Forces.
Ventures require correct planning in order to be financed correctly. This entails a detailed plan an
entrepreneur hopes to carrying out, however, a minor external factor can be brought into the mix in
any moment that can change that plan drastically. An example of an external factor crippling certain
businesses is the housing bubble of 2008. Even if businesses had nothing to do with the real estate
market some of their businesses failed due to the fact that they could not gather finances to keep
their doors open and business running. External factors are not just limited to economic downturns,
however, they include factors such as laws and regulations and trends. If your product or service
becomes highly regulated, then laws and regulations are a major external factor. Trends also lead to
major external forces for businesses because if their product or service

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Crocs, Inc. Case Study Report Essay