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Valuation of Stock
The stock valuation project calls for the choosing of a stock, and I have chosen Cisco Systems. This company is traded on the NASDAQ under the ticker symbol of CSCO. I wanted to choose a stock that is an important part of the business environment. I wanted a growth stock, and looked to technology, but I also wanted to pick something that was a bit under the radar. Cisco fits that bill because it does not sell to consumers, but mainly to other tech companies. In that sense, Cisco is a bellwether stock for the entire technology business.
General Description of the Economy
The general economy is in a state of downturn. The downturn began in 2007-2008 when the financial crisis emerged. This caused a credit crunch, and then job losses. Unemployment and uncertainty saw the reduction of the overall health of the economy. Since…
Duffy, J. (2010). Cisco's top 10 rivals. Network World. Retrieved July 27, 2013 from http://www.networkworld.com/news/2010/101310-cisco-rivals.html
Scholastic Corporate (NASDAQ: SCHL) is an educational publishing firm based in the United States. In order to make an investment recommendation on this stock, a number of different techniques can be used to analyze its financial performance. These include ratio analysis, for which three ratios will be chosen, and trend analysis for the past three years. The stock is currently trading at $26.41, its lowest level since August of 2010, but substantially higher than its levels at the depths of the recession in early 2009. The company has a beta of 1.31, indicating that it is more volatile than the market in general. The three ratios that will be examined are the current ratio, which measures liquidity, the net margin, which measures profitability and the return on equity, which measures the ability of the firm to convert its equity into profit.
The current ratio for Scholastic is 2.27.…
MSN Moneycentral: Scholastic Corporation (2011). Retrieved May 15, 2011 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=schl
The insights and expertise of Kathleen Collings-Lang in the video Stock Valuation are invaluable in gaining insights into the similarities and differences of how bonds and stocks are valued today, emerging trends in these fields, and the critical role of quantitative analysis in determining the value of equity investments. The valuation of stock and equity investments is more accurate when qualitative and quantitative factors are taken into account (Fielitz, Muller, 1985). Ms. Collings-Lang accentuates this point in her discussion of stock valuation techniques, indicating that the selection of a dividend discount rate, which can is often subjective, is integral to the dividend discount model being correctly used to value a given stock. She alludes to the fact that the selection of a dividend discount rate also must take into account he nuanced and highly specific factors impacting a business, seasonality being one of the most significant for capital-intensive…
Chen, Z., & Jindra, J. (2010). A valuation study of stock market seasonality and the size effect. Journal of Portfolio Management, 36(3), 78-92, 10.
Fielitz, B.D., & Muller, F.L. (1985). A simplified approach to common stock valuation. Financial Analysts Journal, 41(6), 35.
The stock that I chose is PepsiCo. I was drinking a Pepsi when I was thinking about a stock to do, and it just seemed like a good idea. That is why I picked the stock, but PepsiCo (PEP on the NYSE) is a major blue chip stock so there is no reason why I shouldn't pick it. The current stock price of PepsiCo is $85.31
PepsiCo is in the food and beverage industry. They manufacture, bottle and distribute mostly soft drinks and snacks. According to the annual report, the company is split 51% food and 49% beverage and has the same split for U.S. revenue and non-U.S. revenue. Two-thirds of the company's business comes from the Americas. Frito-Lay is the major food company and Pepsi is the major beverage company. The company also owns Quaker Oats, which is the owner of Gatorade and Tropicana. This is considered…
Bureau of Labor Statistics. Main page retrieved from http://www.bls.gov/
Bureau of Economic Analysis. Main page retrieved from http://www.bea.gov/
Fredrix, E. (2010). PepsiCo to buy bottlers in deals totaling $7.8b. ABC News. Accessed July 27, 2013 from http://abcnews.go.com/Business/story?id=8248142&page=1
Gangar, S. (2013). Pepsi raises $1.7 billion in fixed, floating-rate bond offering. Bloomberg. Retrieved July 27, 2013 from http://www.bloomberg.com/news/2013-07-25/pepsi-said-to-offer-1-7-billion-of-bonds-in-two-part-sale-2-.html
The stock that I have chosen is Clorox (CLX), the bleach making company. I wanted to find a company that was about as classic a case of a no growth company as possible. Most of the high profile companies in the stock exchange are fast-growing companies, to the point where even those who have a flat domestic share are trying to grow internationally. I wanted to see if there was still a classic no growth company out there, and this was the first one I found.
Clorox is mostly a bleach company, but it has a few other brands that are also familiar to consumers. These include Brita, Burt's Bees, Glad, Pine Sol and Kingsford Charcoal. Most of these brands fit with the general corporate theme of slow-growing businesses in basic industries.
Clorox competes mostly in North America. The economy in the U.S. is the largest on the…
Investopedia. (2013). Dividend discount model. Investopedia. Retrieved July 26, 2013 from http://www.investopedia.com/terms/d/ddm.asp
Morningstar: Clorox. Retrieved July 26, 2013 from http://financials.morningstar.com/valuation/price-ratio.html?t=CLX®ion=USA&culture=en-U.S .
MSN Moneycentral: Clorox (CLX). Retrieved July 26, 2013 from http://investing.money.msn.com/investments/stock-price?symbol=clx&ocid=qbeb
Yahoo! Finance. Retrieved July 26, 2013 from http://finance.yahoo.com/bonds
Firms, even in the same industry, can only be evaluated on the basis of their ratios when their business characteristics are relatively similar. This includes products, markets, responses to economic stimulus, cost of capital and a variety of other attributes. The further Citrus Glow is from its competitors on any key measure the less useful Dan's method becomes. Furthermore, Dan's assumptions regarding the firm's growth prospects are arbitrary, rather than based on accurate assessments of the firm's expected future performance.
4. Joe's variable growth rate approach takes the belief that investors only pay for the known cash flows, that is to say the dividends. In this case, the assumed dividend would begin at $1.50 per share. The terminal value is $8.83, giving the stock a value of $26.63. This sits above Lisa's number, and presumably somewhere below Dan's undisclosed number, since most of his totals are above this point.
Walk Down Wall Street
Stock Valuation from the Sixties through the Nineties
Malkiel notes that there were a number of speculative trends from the 1960s to 1990s, and that they all mended up in the same way. Every few years, the stock market has another bubble or speculative mania which soon crashes and levels off, such as overvalued food stocks in the 1980s or the Nifty Fifty blue chips in the 1970s, but in both cases the speculative phase ended and stocks returned to their normal values. By the 1990s, institutions accounted for more than 90% of the trading volume on the NYSE, and yet professional investors participated in several distinct speculative movements from the 1960s through the 1990s. In each case, professional institutions bid actively for stocks not because they felt such stocks were undervalued under the firm foundation principles, but because they anticipated that some greater fools would…
Malkiel, B.G. (2011). A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. NY: Norton.
Yan, Z. A Random Walk Down Wall Street- The Get Rich Slowly but Surely Book
The valuation and method used to determine the Initial Public Offering (IPO) value of Facebook stock was based on numerous factors. First, it was a much-hyped IPO, with retail investors seeking to get in on the action that venture capitalists had already secured years prior through private investment. Everything connected in one way or another to Facebook was receiving attention, even Zynga, the one-hit wonder PC-game producer. Second, the company’s worth was measured by clicks and projected ad revenue as well as by the number of users of the company’s products. The company had stated a net income of $1 billion in 2011, up 65% year-over-year, indicating that it was steamrolling to profits. With 845 million monthly active users and 483 million daily active users, it was positioned as a great platform for advertsing. Its market cap, however, was a stagger $104 billion at the time of the…
Cauwels, P., Sornette, D. (2012). Quis pendit ipsa pretia: Facebook valuation and
diagnostic of a bubble based on nonlinear demographic dynamics. Journal of Portfolio Management, 38(2): 56-66.
Cusumano, M. (2012). Reflecting on the Facebook IPO. Communications of the ACM,
Gajic, N., Budinski-Petkovic, L. (2013). Ups and downs of economic and
econophysics—Facebook forecast. Physica A: Statistical Mechanics and its Applications, 392(1): 208-214.
Krigman, L., Jeffus, W. (2016). IPO pricing as a function of your investment banks’
past mistakes: The case of Facebook. Journal of Corporate Finance, 38: 335-344.
Valuing Common Equity
Comparison of Lowes and The Home Depot
There are different methods that firms and investors can use to value the common equity that a corporation holds. The different methods all have strengths and weaknesses in different circumstances and it is important to understand these factors in any evaluation. For example, the company's future income stream will ultimately determine the company's fundamental value; however these calculations are not always what determines a firm's market price. Although there are many factors that determine the market price, the company's net present value (NPV) of future revenue streams can be useful to both investors and internal executives relative to managerial accounting. A company's NPV can be used to compare different direct investment opportunities as well as calculating an average cost of capital to serve as an investment baseline; whereas indirect valuation are more subject and often lie on whether investors believe…
Ferris, K.; Petit, B. (2013, August 5). Valuation for Mergers and Acquistions: An Overview. Retrieved from Financial Times: http://www.ftpress.com/articles/article.aspx?p=2109325&seqNum=6
Investopedia. (N.d.). Complete Guide to Corporate Finance. Retrieved from Investopedia: http://www.investopedia.com/walkthrough/corporate-finance/3/stock-valuation/common-stock-valuation.aspx
van Doom, P. (2015, August 20). Opinion: Home Depot vs. Lowe's - which is the winner? Retrieved from Market Watch: http://www.marketwatch.com/story/home-depot-vs.-lowes-which-is-the-winner-2015-08-19
Identification of Subject Property
The subject site is an office property in Oakville, Ontario. It can be sold either in parts or as whole, and this report will consider the whole. The size of the whole building is 4016 square feet. The property is located on the service road adjacent to the Queen Elizabeth Way (QEW), a major highway in the region that links Toronto with the cities of Hamilton and Buffalo. The property can be subdivided into multiple units, at least three. There is a current tenant occupying 839 square feet and room for two more tenants or one primary occupant.
The market for this type of property is relatively soft at present. The prevailing economic conditions are for sluggish growth, with some observers predicting a protracted housing correction and "muted business investment." The recent federal government budget has more cuts than spending, and the…
Colliers Canada: http://www.collierscanada.com/8034
CP. (2013). Leading forecaster sees bleak days for Canadian economy. CBC News. Retrieved April 30, 2013 from http://www.cbc.ca/news/business/story/2013/04/09/business-bleak-outlook-capital-economics.html
Dmitrieva, K. (2013). Toronto offices passing NYC on cheap funding. Bloomberg. Retrieved April 30, 2013 from http://www.bloomberg.com/news/2013-02-01/toronto-offices-passing-nyc-on-cheap-funding-mortgages.html
Goolsby, S. (2009). A summary real estate appraisal report. Earthworks Action. Retrieved April 30, 2013 from http://www.earthworksaction.org/files/pubs-others/Appraisal12-11-2009.pdf
There are a number of different factors that contribute to a stock's valuation in the market compared with the financial statements. One fundamental difference between the two is that the book value reflects past performance while the market reflects future performance. Book value of the company's equity is determined by the past profit performance of the stock and the amount of debt that the company has. The market value reflects the investor's expectations of the future cash flows that will accrue from owning one share of the company's stock (No author, 2011).
Valuing a firm's equity can be done using a number of techniques, each relying on different assumptions. The first of these is the Gordon growth model (or dividend discount model). This model assumes that stocks are valued based on their intrinsic value alone -- that the value of a company's stock is based only on the known…
Fama, E. & French, K. (2006). The capital asset pricing model: Theory and evidence. Journal of Economic Perspectives. Vol. 18 (3) 25-46.
Investopedia (2011). Gordon growth model. Investopedia. Retrieved February 2, 2012 from http://www.investopedia.com/terms/g/gordongrowthmodel.asp#axzz1lFGk3bQ3
No author. (2011). Distinguish between market value and book value of equity securities. Want2Rich.com. Retrieved February 2, 2012 from http://www.want2rich.com/2011/05/capital-markets/distinguish-between-the-market-value-and-book-value-of-equity-securities/
Valuation and Financial Statements
The question of shareholder interest as it pertains to a takeover bid is dependent on a variety of factors, not the least of which is the valuation of the company as determined by the board of directors and executive management. While current stock price plays a relevant role, valuation depends on analysis conducted in key areas including but not limited to: earnings multiple times EBITDA, price to book ratio, forward looking earnings guidance, and perhaps most crucial enterprise value. The current scenario of ABC Company pursuing the acquisition of XYZ Company for $35.00 a share, a $10.00 premium over the current $25.00 stock price, allows for an explication of these valuation techniques.
XYZ management believes that the $35.00 offer price is undervaluing the company and as such is not in the shareholder's interest. In identifying the rationale for this position a logical place to…
Question 1- Valuation - Valuation Using Comparable information- Valuation is a process of estimating worth of an asset. However, when valuing a company or organization there is no "one" correct way to accomplish the task. Each organization may have a different way of reporting historical information, and event financial statements prepared with GAAP show assets based on a more historical, rather than current, paradigm. Generally speaking, though, the valuation of financial assets is done using one of more of three models:
Absolute values -- These models focus on the present value of an asset's expected future cash flows -- using multiperiod models like discounted cash flow or single-period models like the Gordon model. Absolute values take into account objective issues and are quantitatively based, but are valuable as only a partial picture into the actual value of the asset and may not be transferable from one industry to the…
A Basic Guide to Bank-Term Loans. (2012). Entrepreneur. Retrieved from: http://www.entrepreneur.com/article/52728
Chemmanur, T., et al. (2011). How Does Venture Capital Financing Improve Effeciency? Review of Financial Studies. 24 (12): 4037-90.
Edvisson, L., et al. (1997). Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower. New York: Harper Collins.
Fernandez, P. (2002). Valuation Methods and Shareholder Value Creation. London, UK: Elsevier Publications.
It is expected that the bond will mirror the performance of the S & P. 500. ("Transaction History," 2010)
November 24, 2010
On November 24th several more new purchases would take place to include: General Motors, erkshire Hathaway, the Fidelity Immediate Government Fund and the Strategic Advisors Income Fund.
General Motors was selected, because it could help to provide the portfolio with above average growth. The results were that that stock would see an increase of 1.4%. ("Transaction History," 2010)
erkshire Hathaway was purchased to provide the portfolio with stability and diversification. This investment is expected to outperform the major market averages. The results were up .96%.( "Transaction History," 2010)
The Fidelity Intermediate Government Fund was selected because of their focus on medium term Treasury investments. This is expected to underperform the market averages. The results were that the position declined by 2.55%. ("Transaction History," 2010)
Account Details. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/summary.aspx
Ford Posts 68% Rise in Third Quarter Income. (2010). MSNBC. Retrieved from: http://www.msnbc.msn.com/id/39845528/ns/business-autos/
Transaction History. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/transactionhistory.aspx
Kavilanliz, P. (2010). Black Friday. CNN Money. Retrieved from: http://money.cnn.com/2010/11/27/news/economy/Black_friday_2010_sales/
In general, P/E valuation is a common and reliable method for appraising a company's value, but, as with any method, caution must be exercised.
Discounted cash flow
The discounted-cash-flow method is arguably the most complex valuation model discussed in this paper, but it is often considered reliable because it considers a company's post-sale prospects (Calculating Discounted 2005). In the case of the previously discussed over-valued dot.com, it is easy to see where a potential buyer would eventually develop a cash-flow problem. The company is barely profitable, and it's going to take $5 million to purchase the company, likely creating some debt to be serviced. Perhaps a company with multiple business units would be capable of servicing that debt through the performance of the other units, but clearly the business being acquired could not service such debt through its own cash flow.
The discounted-cash-flow method works well because one of the…
Berry, T. 2004, "Planning for Purchasing a Business," Bplans.com, viewed 20 May, 2007 at http://www.bplans.com/bb/article.cfm/138 .
Bizquest Staff, No date, "Valuation Methodologies," BizQuest.com, viewed 19 May, 2007 at http://www.bizquest.com/resource/valuation_methodologies-18.html .
Brooks Barristers No date, "Key Questions When Purchasing a Business," LexisNexis, viewed 20 May, 2007 at http://business-law.lawyers.com/Key-Questions-When-Purchasing-a-Business.html .
Business Valuation Methods" No date, Second Venture Corp., viewed 20 May, 2007 at http://www.secondventure.com/business-valuation-methods.asp.
One of the most significant factors in the decision to invest in ICICI Bank is to determine the affects of recent capital expenditure and the anticipated return for these investments. Entry into microfinancing represents a considerable amount to risk, due to the financial instability of the target market. The following chart highlights the most significant changes affecting the financial health of ICICI bank that result from expenditures associated with entry into the rural finance venture. It compares key indicators and explains the effects of ICICI's most recent changes to their banking strategy.
Income Statement for years 2003-2006 (in millions USD)
Cost of evenue
Balance Sheet for years 2003-2006 (in millions USD)
Cash Flow for years 2003-2006 (in millions USD)
Net Cash Flows Investing
Net Cash Flows Financing
Net Cash Flow
Data Source: Nasdaq.com (2007).
Das, K. (2006). India's ICICI Bank Targets 25 Million New Rural Customers. Innovations in Emerging Markets. Retrieved May 3, 2007 at http://ifcblog.ifc.org/emergingmarketsifc/2006/11/indias_icici_ba.html .
Domash, H. (2007). The Basics: 10 growth stocks that can't be stopped. Moneycentral. Retrieved May 3, 2007 at http://moneycentral.msn.com/content/Investing/Simplestrategies/P109819.asp
Jubak, J. (2006). 10 top stock picks for 2007. Jubak's Journal. Retrieved May 3, 2007 from: http://articles.moneycentral.msn.com/Investing/JubaksJournal/10TopStockPicksFor2007.aspx .
Nasdaq.com (2007). ICIC Bank. Infoquotes. Retrieved May 3, 2007 at http://www.nasdaq.com/reference/glossary.stm#EPS
Executive Stock Option Plans
"If the company does not do better than its competitors, but the stock market goes up, executives do very well from their stock options. This makes no sense." Discuss viewpoint. Can you think of alternatives to the usual executive option plan that take the viewpoint into account?
Executive stock options are performance-based incentive plans that became popular in the 1950s and 1960s. They declined due to the stock market crash of the 1970s, but returned aggressively returned in the 1990s (Kole, 1997). Today, most companies grant stock options to their top officers as part of executive compensation, along with salary and bonuses. Options that are awarded as part of a compensation package can be very valuable to executives when stocks are performing well. The challenge comes in when stock value is realized for executives even when a company is not faring well at all. This is…
Cicero, D.C. (2009). The manipulation of executive stock option exercise strategies: Information timing and backdating. Journal of Finance, 64(6), 2627 -- 2663.
Collins, D.W., Gong, G., & Li, H. (2009). Corporate Governance and Backdating of Executive Stock Options. Contemporary Accounting Research, 26(2), 403-445.
Hamilton, S. And Wise, D. (2008). Adding performance criteria to your stock options. Hay Group. Retrieved from http://220.127.116.11/haygroupusmkting/e_article001162460.cfm.
Hess, D. (2012). More Stock Rewards Tied To Performance. Crain's New York Business, 28(31), 0015.
00. ("Nue Core," 2010) Arcelor Mittal has trailing PE ratio of 23.28 and a forward PE ratio of 7.09. The current ratio is 1.35 and the put call ratio is .55. The price dividend ratio is 45.74, while the beta is 2.70. ("Arcelor Mittal," 2010)
Upon doing a side by side comparison, Arcelor Mittal is the strongest company out of three. This is because their PE ratios remained more stable over the past year and the reading of 7.09 on the forward PE ratio, is an attractive long-term valuation. The high put call ratio indicates that investors have become somewhat pessimistic in the stock. The price dividend ratio is the only drawback, where historically this number should be in the 14 to 17 range. However, given the volatile nature of the steel industry, the fact that they are continuing to pay dividends after a severe recession is a sign of…
Arcelor Mittal. (2010). Retrieved June 12, 2010 from Yahoo Finance website: http://finance.yahoo.com/q?s=MT
Arcelor Mittal. (2010). Retrieved June 12, 2010 from Schaffer's Research website: http://www.schaeffersresearch.com/streetools/indicators/putcall_open_interest_ratio.aspx
Nue Core. (2010). Retrieved June 12, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/ks?s=NUE+Key+Statistics
Nue Core. (2010). Retrieved June 12, 2010 from Schaffer's Research website:
When it comes to the valuation of equities, there are three different methods that are commonly used. These three methods are the dividends valuation method, the free cash-flow method and the market-based method. As one might expect, there are pros and cons to each approach. As such, a proper compare and contrast of what is better in what ways and what is potentially inferior in other ways can and should be ventured into. Of course, there would be advantages and disadvantages to all three methods and this would thus lead to one method being favored in a given situation, for whatever reason. While the perceived outcomes and such would be different for each method, the proper method of valuation should be chosen based on the situation and the perspective/needs of the company or person doing the evaluating.
When it comes to the free cash flow method, this…
Cherewyk, P. (2011). Valuing Firms Using Present Value Of Free Cash Flows. Investopedia.
Retrieved 7 September 2016, from http://www.investopedia.com/articles/fundamental-analysis/11/present-value-free-cash-flow.asp
Tarver, E. (2015). What are the advantages and disadvantages of the Gordon Growth Model?.
Investopedia. Retrieved 7 September 2016, from http://www.investopedia.com/ask/answers/032415/what-are-advantages-and-disadvantages-gordon-growth-model.asp
The FCF-based valuation model is based on the following formula:
EBIT (1-Tax Rate) + Depreciation & Amortization - Change in Net orking Capital - Capital Expenditure
is the free cash flow each year, C0 is the original cash outlay, and r is the discount rate. The free cash flows in this type of calculation are only those cash flows that are incremental to the investment decision. Thus, they do not include such non-cash items as depreciation or amortization expense, and they do not include either sunk costs or non-incremental flows like overhead allocations. The r is the discount rate, and the firm can select its discount rate from a number of different options. The most common, and arguably logical, is the firm's weighted average cost of capital. This reflects the firm's cost of equity, its cost of debt and its capital structure, with allowances for preferred shares…
Berkman H., Bradbury, M. & Ferguson, J. (2002). The accuracy of price-earnings and discounted cash flow methods of IPO equity valuation. Journal of International Financial Management and Accounting. Vol. 11 (2) 71-83.
Del Vecchio, J. (2000). Dividend discount model. Motley Fool. Retrieved April 27, 2012 from http://www.fool.com/research/2000/features000406.htm
Demirakos, E., Strong, N. & Walker, M. (2004). What valuation models do analysts use? Accounting Horizons. Vol. 18 (4) 221-240.
Francis, J., Olsson, P. & Oswald, D. (2000). Comparing the accuracy and the explainability of dividend, free cash flow and abnormal earnings equity value estimates. Journal of Accounting Research. Vol. 38 (1) 45-70.
If one particular company has plenty of liquid assets, which therefore assures its progression in future business ventures, then the company has good potential for investing. However, if the company seems to have more current liabilities than assets and capitol, then the investor should definitely look elsewhere.
There are several ways which investors should judge companies in terms of potential investments. One is to judge a company based on their earnings per share, which is calculated through the earnings of the company in the last four quarters. Revenue-Based Evaluations compares companies based on revenues as related to company costs or long-term debt. Investors should also look at a company's cash-flow, or the amount of capitol which actually passes through a company each quarter after that company withdraws money for the cost of maintaining business. Another way is to judge based on the equity of a company, which is judging the…
I vs. MI Valuation Methods
The process of capital budgeting in corporations involves selecting projects that add value to the organization. Capital budgeting can involve nearly everything like buying a new truck, replacing old machinery, and acquiring some land. In most cases, businesses, especially corporations, are required to conduct these projects in order to improve profitability and enhance the wealth of shareholders. The process of undertaking a capital budgeting decision requires the company to first determine whether the project will be profitable. The determination of the profitability of a project is accomplished through the use of several valuation methods like the Internal ate of eturn, Net Value Present, and Modified Internal ate of eturn. These approaches usually produce different results though the ideal capital budgeting solution should result in the indication of the same decision by the three metrics. Organizations tend to place more emphasis on one valuation method than…
Abraham, A. (n.d.). Modified Internal Rate of Return MIRR. Retrieved June 30, 2012, from http://finance.thinkanddone.com/mirr.html
"Financial Valuation Concepts -- The Internal Rate of Return (IRR)." (n.d.). Financial Modeling
Guide. Retrieved June 30, 2012, from http://www.financialmodelingguide.com/valuation-concepts/financial-valuation-concepts-the-internal-rate-of-return-irr/
Pinkasovitch, A. (2011, July 8). An Introduction to Corporate Valuation Methods. Retrieved June 30, 2012, from http://www.investopedia.com/articles/financial-theory/11/corporate-project-valuation-methods.asp#axzz1zDx96PU0
Black & Decker
Since the merger with Stanley, Black and Decker has seen a steady increase in its revenues, gross profit and net income. The different elements of the new company are still being integrated, underperforming divisions are being shed, and synergies between the different components are still being developed. As the company continues to make internal improvements, it can expect that it will continue to grow both its top and bottom lines. It is reasonable to expect that over the next 2-3 years, ongoing internal improvements will help to improve margins, all other factors being equal. The post-merger improvements in the percentage of SGA expenses to revenue should continue in the short-run, albeit at a slower pace. Likewise, internal factors are likely to be responsible for at least a modest growth in income, as marketing synergies in particular emerge.
External factors are also critical to the forecast. The…
Schurr, L. (2013) Home prices see best yearly gain since 2006. Reuters. Retrieved January 29, 2013 from http://www.reuters.com/article/2013/01/29/us-usa-economy-homes-index-idUSBRE90S0JZ20130129
The company is being set up as that of a retail company, and this will require the demands of a large amount of stock. Most of the stock needs to be bought and then sold at the earliest opportunity which is available. It could also be stated that it may also be possible to get suppliers who will supply at regular fixed intervals of duration of a week or so. This will help as regards to keeping the stock within the limits of the store or at a nearby stock point. Under such cases or circumstances, it should be viewed that the stocks which are been seen as coming in first are being sold first. The importance of last stocks in, first stocks out comes only when stocks are being held for a considerably longer period of time. In this case, it could be said that even the…
"Buyers Will Buy at Their Price ... Not Yours" Retrieved from http://www.novarsgroup.com/prep-plan/sell_3_6/worth.html Accessed 19 August, 2005
Wells, Joseph. T. (June, 2001) "Ghost Goods: How to Spot Phantom Inventory" Journal of Accountancy. Retrieved from http://www.aicpa.org/pubs/jofa/jun2001/wells.htm Accessed 19 August, 2005
Real options valuation: KLM ailines flight options
The object of this pape is to delive a eal option valuation of an option on an ai ticket fom KLM Ailines. The pape consists of seveal pats: (i) a file explaining the poblem, the modeling choices and the solutions (ii) a table with calculations and; (iii) the conclusion.
The value of an options contact elies on a vaiety of diffeent vaiables. In addition to the value of the undelying asset itself, options ae extemely complex to value. Thee ae many picing models in cuent use, though all basically incopoate the concepts of moneyness, ational picing, put-call paity, option-time value.
Moneyness is a measue of the degee to which a deivative is likely to have positive monetay value at its expiation.
Rational picing is the assumption in economics that asset pices will eflect the abitage-fee pice of the asset as any…
references supporting the theory that option traders use much more robust hedging and pricing principles than the Black, Scholes and Merton model.
9. Triana, Pablo (2009). Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets?. Wiley. ISBN 9780470406755. The book takes a critical look at the Black, Scholes and Merton model.
10. KLM News Release, Nov. 12, 2010, Take an option on a flight, at, http://www.klm.com/travel/nl_en/about/news_press/travel_news/Take_an_option_on_a_flight.htm
11. KLM News Release, Feb. 9, 2011, Financial Year 2010-2011, http://www5.klm.com/corporate/en/newsroom/press-releases/archive-2011/financial-year-2010-11.html
12. Understanding Option Pricing, http://www.investopedia.com/articles/optioninvestor/07/options_beat_market.asp
41 in the next three years. The current price for al-Mart implies strong growth prospects. The company does have a sound strategy to retain its new customers and refocus growth efforts on less-saturated markets overseas.
In short, while there can be little doubt as to al-Mart's operational excellence, it is not necessarily a great investment. Growth has in recent years been of the slow and steady variety. The company's present valuation may be symptomatic of its status as a safe haven for investors during tough economic times. This means that the growth implied by its current share price may not be justified. Therefore, while al-Mart is a great company to own, it may not be the best investment at its current price and with the market beginning to show signs of recovery. The 0.20 beta and historic low volatility mean that al-Mart shareholders will not reap the benefits of market…
Wal-Mart 2009 Annual Report. Retrieved June 7, 2009 from http://walmartstores.com/sites/AnnualReport/2009/
Some financial data and ratios from MSN Moneycentral. Retrieved June 7, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=WMT
Cheng, Adriana. (2009). Wal-Mart needs to prove it's more than a recession play. Marketwatch. Retrieved June 7, 2009 from http://www.marketwatch.com/story/wal-mart-needs-to-show-legs-beyond-recession-play
Loth, Richard. (n.d.) Financial Ratio Tutorial. Investopedia. Retrieved June 7, 2009 from http://www.investopedia.com/university/ratios/
That was the year that significant changes were made in the Securities Act and the rules for bringing class action lawsuits were adjusted and modified. Because of those changes, it became more important from a litigation standpoint to ensure that conservatism was used in accounting valuation. Because there are empirical differences between the contracting and litigation perspectives, there have been many discussions regarding them in the past and that will likely continue well into the future. Each accounting firm must do what it feels is in the best interest of both itself and its clients, but the avoidance of lawsuits is a highly significant issue to consider when a company is planning to focus on a particular accountancy option.
C. Income Tax Perspective
Because income taxes are so closely tied to earnings, it only stands to reason that there would be an accounting valuation issue as it relates to conservatism…
Ahmed, A.S., B. Billings, M.S. Harris and R.M. Morton. 2001. Accounting conservatism and cost of debt: An empirical test of efficient contracting. Working paper, Syracuse University.
Ahmed, A.S., R.M. Morton and T.F. Schaefer. 2000. Accounting conservatism and the valuation of accounting numbers: Evidence on the Feltham-Ohlson (1996) model. Journal of Accounting, Auditing & Finance 15 (Summer): 271-292.
American Institute of Certified Public Accountants, Committee on Accounting Procedures (AICPA). 1939. Accounting Research Bulletin 2.
Antle, R. And R. Lambert. 1988. Accountants' loss functions and induced incentives for conservatism. In Economic Analysis of Information and Contracts: Essays in Honor of John Butterworth, edited by G. Feltham, A. Amershi, and W. Ziemba. Boston, MA: Kluwer Academic Publishers.
022 million was registered in 1998 and the lowest of $308.670 million was registered in 2001
The operating expenses fluctuated between the high value of $24.745 million in 2000 and the low value of $15.737 million in 1998
The operating profit also fluctuated between $21.250 million in 1997 to a negative 17.591 million in 2000
The net income followed a constant descendant trend, decreasing from $12.368 million in 1997 to -$26.393 in 2001 (Keystone Workbook, Historical Common Size Income Statements)
elative to financial ratios, the following must be considered:
All ratios of operational analysis are larger than the industry averages, meaning that the company operates at high levels of quality and performance
With the exception of payable turnover and cash conversion cycle, all resource management ratios are superior to the industry averages, meaning that Keystone is fairly able to use its resources and transform them into money
Profitability ratios are…
Valuation, risk and return are closely linked, from different perspectives. Primarily, risk determines, to some degree, the level of returns, while both need to be seriously considered when conduction a valuation. In many occasions, the analysts work with information from the present, creating forecasts about risk and return that allows them to give, with a reasonable probability, expectations about future events.
This paper aims to look into more details at aspects related to valuation, risk and return. It will look, in the beginning, at different valuation techniques, detailing each of them and presenting their advantages and disadvantages. It will then focus on the analysis of risk and return, as a fundamental component of the valuation process. The paper will conclude with an overview of the methods and techniques described and ideas on best practices.
Valuation is the process of putting value on something, of analyzing what…
1. N.a. (2005). Valuation techniques. Vault Guide to Finance Interviews. On the Internet at http://www.bc.edu/clubs/bcfa/docs/vault/Valuation%20Techniques.pdf . Last retrieved on July 31, 2014
2. Giddy, Ian (2006). Methods of Corporate Valuation. On the Internet at http://people.stern.nyu.edu/igiddy/valuationmethods.htm . Last retrieved on July 31, 2014
3. Womack, Kent; Zhang, Ying, (2003). Understanding Risk and Return, the CAPM,
and the Fama-French Three-Factor Model. Tuck School of Business at Dartmouth. No. 03-11
eal Options Valuation
Market investors often carry out their research in a sell side or buy side method. Sell side carry out their investment research to enable them satisfy buy side customers. They carry out this research to generate business or reach the goal of generating transactions. The buy side follows the prospective of banking customers as away of attracting new customers and a service to past customers. Sell side firms sell IPO's and services to the buy side companies.
Buy side and sell side
Buy side reports produced in house consumption are used by colleagues to the analyst. These colleagues can be corporate development executives and development and portfolio managers. Sell-side reports done by firm analysts are vastly distributed than the buy side reports. Sell side reports should be clear because of their wide distribution, while by side reports should be simple and brief because company's management uses them.…
Albrran, B.S. (2009). Handbook Of Media Management Aand Economics. Atlanta: Routledge.
Amram, M. (2002). Value Sweep. Atlanta: Havard Business Press.
Hook, C. (2010). Security Analysis And Business Valuation On Wall Street. New York: John Willey and Sons.
Marion, A. (2003). Real Options In Practice. New York: John Willey and Sons.
Marketing Valuation of Special Kellog's Cereal
Marketing valuation Kellogg's Special K. cereals
Kellogg's Foods: 3
Marketing mix: 3
Product Differentiation: 5
Triple bottom line Strategy: 6
Financial, Social, and Environmental Factors: 7
The business case of Kellogg's Special K. cereals is analyzed to assess the effectiveness of marketing mix, key features of the business strategy, and growth factors. The history of Kellogg's Foods is briefly described along with the analysis of marketing mix. Later section provides a brief about the product differentiation strategy of the business. The recommendations for overall business are followed by the triple bottom line strategy. Finally conclusion is presented as a summary of the findings.
The company started its operation in 1906 and expanded its operations in domestic market. The first international opening is remarked as its Canada operations in 1914. The innovative development in 1915 was introduced…
Advertisements, S.K. (2012). Feeling Good Never Looked Better. Challenging Images of Women in the Media: Reinventing Women's Lives, 3.
Aschemann-Witzel, J., Perez-Cueto, F.J., Niedzwiedzka, B., Verbeke, W., & Bech-Larsen, T. (2012). Lessons for public health campaigns from analyzing commercial food marketing success factors: a case study. BMC public health,12(1), 139.
Henriques, A., & Richardson, J. (2004). The triple bottom line, does it all add up?: assessing the sustainability of business and CSR. USA: Earthscan.
Kellogg's Foods.(n.d.).Cereals. Retrieved from: http://www.specialk.com/cereals
Apple Inc. Stock
In 2017, AAPL has performed quite well. It started the year off at $115 and today is selling for $170. 2017 has been a great year for stocks, with the election of President Trump seeming to have a lot to do with the rise in equities across the board, as the market has expected the President to introduce tax cuts that would be good for businesses like Apple. I was attracted specifically to Apple because I am an Apple user, enjoy the products, have many friends who enjoy the products and think it is a great brand to be a part of. I think that it will continue to perform well thanks to the creative forces within the company and the good leadership at the top of the company.
I bought AAPL at $156 and sold at $174 for an 11.5% gain. I purchased the stock because…
UnitedHealth Group Stock
This report will provide insight into the UnitedHealth Group Stock from an investor's perspective. The report will show a financial analysis included with an overview of the company's current health standing. The paper will also provide a summary of the company and their products and services. The key to any intelligent investing strategy lies in the investor knowing what a stock is really worth and also if it is safe to buy, sell or hold. Therefore, since this report is from an investor's perspective, the company's stock and industry will be reviewed so as to present a big picture of where United Health is today and where they want to go in the future.
Over the five past years the UnitedHealth Group stock has been making great progress as analysts consistently consider the group a strong buy option. As can be seen from the two…
UHC Home Page. Ed. UnitedHealthcare. UNH. http://www.uhc.com/ .
United Health Group Home Page. Ed. United Health Group. UnitedHealth Group. http://www.unitedhealthgroup.com/ .
UnitedHealth Group. Ed. Yahoo Finance. Yahoo Finance. http://finance.yahoo.com/q?s=UNH&d=t .
If you need to type anything after the Reference List then start it on this page
Facebook IPO Valuation Method
In accordance to the Securities Exchange Commission (SEC) egistration Statement Form S-1, Facebook's Initial Public Offering (IPO) method of valuation encompassed considering several objective and subjective factors to ascertain their best estimate of the fair value of their Class B common stock. The factors included latest private stock sale transactions, historical financial results and projected trends, and projections for Facebook's future financial performance. There was also the factor of the performance and market position in relation to competitors and identical publicly traded corporations. Another factor was the economic and competitive setting, taking into account the industry in which Facebook operates and independent third-party valuations completed at the end of every financial quarter (Securities Exchange Commission, 2012).
The valuations of the Facebook IPO took into consideration the aforementioned factors and also employed a combination of financial and market-based methodologies to ascertain the firm's business enterprise…
Alter, D. (2016). Why the Facebook Stock will see a 112% gain by 2020. Money Morning. Retrieved from: http://moneymorning.com/2016/06/08/why-the-facebook-stock-price-will-see-a-112-gain-by-2020/
Bhuptani, R. (2013). How does IPO Pricing Work? Forbes. Retrieved from: http://www.forbes.com/sites/quora/2013/11/08/how-does-ipo-pricing-work/#3c55ed273712
Hamilton, B. (2013). 5 Reasons Investing In An IPO Could Be A Terrible Idea. Business Insider. Retrieved from: http://www.businessinsider.com/5-myths-about-ipo-investing-2013-10
Investopedia. (2015). 5 Tips for Investing in IPOs. Retrieved from: http://www.investopedia.com/articles/00/100300.asp
By opening stock options to middle management and employees, it was assumed that better employee performance would be incentivized. As company stock prices go up, it creates a greater spread between the option price when it was granted to the employee and the hypothetical sale price at the end of the vesting period. Consistently better performance over a longer period of time would yield greater reward when the option is exercised. However, as Hall and Murphy again point out, "even if employees can increase the value of the firm, their share of that gain through their option holdings is very small. Combining this enormous free-rider problem with the risk imposed on employees through stock-based pay, it seems obvious that cash-based incentive plans based on objective or subjective performance measures can provide stronger and more efficient pay-performance incentives."
Despite many early statements in the life of the practice that employee stock…
Calomiris, C. a. (2004, 01-08). Options Pricing and Accounting Practice. Retrieved 12-13, 2010, from Should We Expense Stock Options: http://docs.google.com/viewer?a=v&q=cache:tDxxxPDG3cwJ:www0.gsb.columbia.edu/faculty/ccalomiris/papers/Options%2520Pricing%2520and%2520Accounting%2520Practice.pdf+Stock+options+are+an+expense&hl=en&gl=us&pid=bl&srcid=ADGEEShtdjeKitOxVfuENYIeyxgGdUiOjraoDHCLwH-WWxt9w30pnL310kAkP21iDHhBpErxlJ6mC_GQS6NEu7L3UGdc6T1ky33N1e7CFGL_NSZAn5ntALxB4KVgA2vjEiww911f6x4d&sig=AHIEtbRx6dSwLFzFHZnpHTpV0lsNIVpCYw
Core, J. a. (2001). Stock option plans for non-executive eployees. Journal of Financial Economics (61), 253-287.
Engel, E. a. (2001, Jan.). The Roles of Performance Measures and Monitoring in Annual Governance Decisions in Entrepreneurial Firms. Retrieved 12-13, 2010, from an Analysis of Executive Compensation, Ownership, and Control in Closely Held Firms: http://docs.google.com/viewer?a=v&q=cache:5vp-iWjpPb4J:faculty.chicagobooth.edu/ellen.engel/research/egh-rev-11_2.pdf+%E2%80%98%E2%80%98Stock-based+pay+in+new+economy+firms%E2%80%99%E2%80%99.+Journal+of+Accounting+and+Economics,&hl=en&gl=us&pid=bl&srcid=ADGEESifIyqUeDNwUoNkeDagDN_o40V-Jd9R56ECpswKKWzRQRdz_dZzpDHfcmTAKvZCDwZPpz9ZtR51HmXhCZ408jF-cv485C4m1xIxTy2zfTfQ4rp_g-4KFhIUdwKFVtmNCOWy82W5&sig=AHIEtbQapxbbbr0z-APPf2sdFQgWOYglLA
Glater, J. (2009, March 26). Stock Options Are Adjusted After Many Share Prices Fall. New York Times, p. B1.
The first component is as follows: Net Margin = Net Income/Sales. How much profit Abbott laboratories makes for very $1.00 it generates in revenue, and the higher a company's profit margin the better. The second component is as follows: Asset Turnover = Sales/Total Assets. The amount of sales generated for every dollar's worth of assets. This measures Abbott's efficiency at using assets, and again, the higher the number the better. The final factor of the Du Pont analysis is as follows: Leverage Factor = Total Assets/Shareholder's Equity. The higher the number, the more debt the company has. Abbott's Du Pont analysis is computed using the following equation:
In this case, for the end of 2006, Abbott Laboratories reported a net income of $717 million dollars, sales of $22,476 million, total assets for 2006 of $36, 178 million, and equity of $14,054 for 2006. Placing these figures into the equation above…
Abbott. (2007). About the Company. Retrieved November 9, 2007 at http://www.abbott.com .
Epsicom. (2007). Abbott Medical Device Company Intelligence Report. Retrieved November 9, 2007 at http://www.piribo.com/publications/medical_devices/companies/abbott_medical_device_company_intelligence_report.html .
McKinnell, H. (2003). Performance Report. Bayer AG 2003 Annual Review: 1-30.
Rogers, M. (2003). Risk Management in Real Options-Based Pharmaceutical
Multiples Valuation and Estimation of Financial Distress of William Companies
The paper uses the market approach to calculate the William Companies multiples-based valuation of shares. The direct competitors of Williams Companies are:
The paper uses 200 financial statements of Williams Companies and its competitors to carry out the multiple valuation of shares.
The next step is to determine the correct P/E (Price Earning) Ratio and the formula to calculate the P/E ratio is as follows:
P/E = "Current Stock Price / (Net Profit / Weighted average number of shares)"
The P/E ratio of Williams Companies peer companies is as follows:
Number of Shares
4, 324 M
There are discrepancies encountered in conducting the valuation and risk of a private company. There arises these factors that if investigated can impact the process accordingly. The first research question that I suggest is investigating if the tax risk and equity market value exhibit a concave association, which is consistent with the optimal tax risk level from a valuation of equity standpoint. The second topic that can be researched upon is the changes facing the risk and value valuation service area for businesses and how they impact the practice. Finally, a study on how the Merger and Acquisitions revised standards are impacting business deals.
Chandra, U., & o, B.T. (2008). The role of revenue in firm valuation. Accounting Horizons,
22(2), 199-222. etrieved from http://search.proquest.com/docview/208923683?accountid=35812
Darrough, M., & Ye, J. (2007). Valuation of loss firms in a knowledge-based economy. eview of Accounting Studies, 12(1), 61-93. doi: http://dx.doi.org/10.1007/s11142-006-9022-z
Chandra, U., & Ro, B.T. (2008). The role of revenue in firm valuation. Accounting Horizons,
22(2), 199-222. Retrieved from http://search.proquest.com/docview/208923683?accountid=35812
Darrough, M., & Ye, J. (2007). Valuation of loss firms in a knowledge-based economy. Review of Accounting Studies, 12(1), 61-93. doi: http://dx.doi.org/10.1007/s11142-006-9022-z
Bernier, G., & Ridha, M.M. (2010). On the economics of postassessments in insurance guaranty funds: A stakeholders' perspective. Journal of Risk and Insurance, 77(4), 857-892.
Security Valuation eport
Select Harvests Competitive Analysis
Select Harvests Limited is a leader in the almond industries not only in Australia, but also globally. In addition, for a number of years now, the company has operated a global competitive almond operation, bringing about strong revenues and proceeds to the stakeholders. Global competitiveness and additional prospects to leverage systematization and scale invigorated the company to additionally increase its acreage (Bird, 2015). The Select Harvests faces great competition from the industry, including numerous Almond Manufacturers that are yet to be listed in the stock exchange, for instance, Nut Producers Limited, Almond Co Limited, and also Olam International. Select Harvests has a competitive edge in the industry. For starters, approximately 50% of the revenue generated by the company emanates from the management fees of third parties, in addition to the capital financed in the past three decades or so, in research and development,…
Bird, J. (2015). Review of Non-Forestry Managed Investment Schemes Submission by Select Harvests Limited "SHV." Retrieved 6 February 2016 from: http://archive.treasury.gov.au/documents/1423/PDF/Select_Harvests_Limited.pdf
Select Harvests. (2010). Retail Entitlement Offer. Australian Stock Exchange. Retrieved 6 February 2016 from: http://www.asx.com.au/asxpdf/20100826/pdf/31s3mj8tmhgt14.pdf
Wong, J. (2010). Retrieved 6 February 2016 from: http://joewong83.blogspot.co.ke/2010/11/select-harvests-business-model-and-its.html
Stock Valuation Questions
The market price for a stock or a bond may be influenced by both positive and negative risks. Using the example of Apple it is possible to consider two potential risks.
Apple Inc. is well-known for its aggressive defense of its patents; the best known cases are between Apple and Samsung with cases in more than 50 cases across multiple countries at one point in 2012 (Mueller, 2012). Apple and Samsung both had victories and defeats which were aggressively fought. These battles show how important development and ownership of a patient can be, with firms seeking to protect their intellectual property. A potential threat may emerge if Apple faced a claim of credible claim of patent breach from another major supplier for a core product, where stockholders may fear that the firm may be liable for a potentially large settle and/or withdraw the offending products…
Carter, M, (2014, Feb 22), Why Whole Foods Market May Have a Big Problem, Motley Fool, accessed 22nd Feb at http://www.fool.com/investing/general/2014/02/22/why-whole-foods-market-may-have-a-big-problem.aspx
Lambert, T, A, (2008), Four Lessons from the Whole Foods Case, CATO Institute, accessed 22nd Feb at http://object.cato.org/sites/cato.org/files/serials/files/regulation/2008/2/v31n1-4.pdf
MacKey, J; Robb, W, (2013). Letter to Stakeholders, accessed 22nd Feb 2014 at http://www.wholefoodsmarket.com/sites/default/files/media/Global/Company%20Info/PDFs/WFM-2013-Letter-to-Stakeholders.pdf
Meador, Don; Britton, Mike; Phillips, Paige; Howery, Andrew, (2007), Case Analysis -- Whole Foods Market, accessed 22nd Feb 2014 at http://pnphillip.asp.radford.edu/whole%20Foods%20Case.pdf
LinkedIn Corporation is the "biggest professional-networking website" (Kucera & Frier, 2012). Launched on May 5, 2003 (Linkedin Corporation, 2012), and going public on the New York Stock Exchange in May, 2011 (Kucera & Frier, 2012), LinkedIn's stock more than doubled in value since going public, with stock valuation at $117.30 at close of trading on May 4, 2012 (Kucera & Frier, 2012), and LinkedIn increased its membership from 150 million to 161 million during the 4th quarter of 2011 (Kucera & Frier, 2012). Clearly, LinkedIn is a success story on several levels. Nevertheless, LinkedIn must deal with external and internal challenges, as do all corporations. A significant external factor/challenge to LinkedIn is posed by huge social networking sites, while a notable internal factor/challenge is presented by the lack of income from most of LinkedIn's users. These factors, along with other external and internal challenges, mean that LinkedIn cannot be…
CrunchBase. (2012). MySpace | CrunchBase profile. Retrieved June 1, 2012 from www.crunchbase.com Web site: http://www.crunchbase.com/company/myspace
Edwards, J. (2011, November 17). How LinkedIn's lousy sex appeal could end up killing it. Retrieved June 1, 2012 from articles.businessinsider.com Web site: http://articles.businessinsider.com/2011-11-17/tech/30409114_1_linkedin-members-social-network-zynga#comments
Facebook. (2012). Key facts - Facebook newsroom. Retrieved June 1, 2012 from newsroom.fb.com Web site: http://newsroom.fb.com/content/default.aspx?NewsAreaId=22
Kodicherla, V.C., Karunanidhi, R., & Hinge, M. (2011). LinkedIn Corporation - A case study. Pittsburgh, PA: Carnegie Mellon University.
Finance-dominated proponents also maintain that boom economic periods generate a more varied divergence of valuations that fuel merger activity (Medlen 2007). In this regard, Medlen concludes that, "Taken collectively, these understandings may explain some of the merger activity in booms, but they involve certain asymmetries that undercut their explanatory power. High stock valuations allow stock to be utilized as currency and collateral for takeovers; yet stock booms also make targets expensive" (p. 202). Moreover, despite the commonly held perception that mergers are a "quick and dirty" way to grow a business and achieve organizational goals, there remains a lack of convincing empirical evidence in support of this perception (Medlen 2007). As Medlen points out, an "anomalous fact about mergers concerns the lack of evidence that mergers are profitable. This fact begs the question: why then are mergers carried out with such frequency and with such large levels of capitalization?" (p.…
Ahern, K.A. & Weston, J.F. (2007). 'M&as: the Good, the Bad, and the Ugly.' Journal
of Applied Finance, vol. 17, no. 1, pp. 5-7.
Babbie, E. (1990). Survey Research Methods (2nd ed.). Belmont, CA: Wadsworth
Fortunately for this sector the main opportunities for ships are in fulfilling existing contracts and the delivery of two Virginia-class submarines in the 2012 timeframe which are on schedule for delivery. As post-Katrina efforts to get production back on schedule continue it's believed the company can generate 8% margin in this specific sector going into FY 2007.
In summary, the table Analysis of Key Business Segments shows the success the company has had in distributing revenue over more segments, thereby alleviating risk while being able to position itself to take advantage of greater market opportunities in the process. The growth Mission Systems and Space technology, while much of the product development is confidential, show strong revenue and income growth which will continue given budgeting for space-based monitoring and defense systems.
Analysis of Key Business Segments
evenues 12/31/2005 (%) 12/31/2004 (%) 12/31/2003 (%) 12/31/2002 (%) 12/31/2001 (%) Electronic Systems 6,042,000 20%…
CIBC World Markets (2006) - Northrop Grumman Highlights from NOC 2006 Analyst Day. November 10, 2006. Edwin Keller and Myles Walton.
Credit Suisse (2006) - Opportunities and Challenges: Northrop Grumman Corporation. Credit Suisse Equity Research United States. Published Date 10 November, 2006.
Northrop Grumman Corporation (2006) - Company profile completed by Data Monitor Corporation. August, 2006. Accessed using EBSCO Host on November 19, 2006
Northrop Grumman Equity Research (2006) - JP Morgan North American Equity Research. JP Morgan Securities. Publish Date 10 November 2006
Firms may be successful by satisfying customer needs, but their ultimate accountability for financial performance is to the owners of the firm. Actions undertaken by quoted firm will usually have the direct, or indirect, aim of generating revenues and profits for the firm, and therefore the owners (Tarraf, 2012). When investors assess a potential investment they will look at the financial performance of a firm, assessing the past performance, with consideration of the way current and expected strategies will impact on the organizations performance, in the context of the expected macro-environmental conditions (Bodie, Kane, & Marcus, 2014). The investors will assess the share price of the firm, being more likely to make a purchase if they believe the value of the share is likely to increase with a significant amount of the assessment based on assessments of past performance (Hens & Rieger, 2016; Nellis & Parker, 2006). This…
Defining the term "good company" on the terms of it recently experiencing rapid growth may be premature in realizing its worth as an investment. apid growth is a tricky idea and may lead many investors down the wrong path if they are unaware of the basics of stock valuation and determining what is right, prudent and wise. Although rapid growth may be an indicator of in fact a very good company to invest in, this criteria alone does not serve the successful investor in all cases.
Value is what is most important in this equation, as the risks involved in the market are unforgiving in those who ignore this idea in its entirety. Hough (2011) agreed with this idea when he wrote "esearchers have long studied the relationship between "value" and "growth" stocks. The difference mostly has to do with price. Value stocks are cheap relative to fundamental…
Business Dictionary.com (nd). "Total Risk." Viewed 3 July 2014. Retrieved from http://www.businessdictionary.com/definition/total-risk.html
Hough, J. (2011). Why Value Will Beat Growth. The Wall Street Journal, 29 Oct 2011. Retrieved from http://online.wsj.com/news/articles/SB10001424052970204505304577003822965852682
financial management methods, concepts and techniques are explained, their uses are analyzed and explained in detail. This paper also highlights the importance of these methods in the financial management and financial manager's decision making process. The case of Suarez Manufacturing is used to further explain the use of these methods.
Financial management is all about managing the finance of the company by making various investing, financing (debt financing or equity financing) or distributing (Dividend) decisions. The finance managers of a company are constantly involved in making various financial calculations so as to come up to those fundamental financial management decisions. (Correia et al., 2007)
Financing the projects of the company can be done by debt financing, equity financing or a combination of both types of finances. Debt and Equity finance can be obtained in many ways and the valuation of both debt and equity market values of the company can…
Chandra, P. (2011). Financial Management. New Delhi: Tata McGraw Hill.
Correia, C., Flynn, D., Iliana, E. & Wormland, M. (2007). Financial Management. South Africa: Juta and Company Limited
Ehrhardt, M.C. & Brigham, E.F. (2011). Financial Management. Singapore: South Western Cengage Learning
Khan, M.Y., & Jain, P.K. (2007). Financial Management. New Delhi: Tata McGraw Hill.
Cellular service was launched in UK in 1985. Cantel and affiliates of Mobility UK were licenced to operate at 800 MHz. Personal Communications Services (PCS) operating at 1.8 GHz was licenced in UK in December 1995 with two new players, Clearnet and Microcell each receiving 30 MHz of spectrum. Mobility UK affiliates and Cantel each received 10 MHz of new spectrum. PCS service was launched in late 1997. Today, a wide variety of national and regional licenced wireless carriers, along with numerous resale partners, provide wireless voice and data services covering more than 99 per cent of the UK population:
Petro UK Mobility
7-Eleven Speak Out Wireless
ehavioral Finance and Human Interaction a Study of the Decision-Making
Processes Impacting Financial Markets
Understanding the Stock Market
Contrasting Financial Theories
Flaws of the Efficient Market Hypothesis
Financial ubbles and Chaos
The stock market's dominant theory, the efficient market hypothesis (EMH) has been greatly criticized recently for its failure to account for human errors, heuristic bias, use of misinformation, psychological tendencies, in determining future expected performance and obtainable profits.
Existing evidence indicates that past confidence in the EMH may have been misdirected, as the theory's models do not show a thorough understanding of trading operations in a realistic light.
Researchers have suggested that a variety of anomalies and inconsistent historical results demand that traditional financial theories, namely the EMH, be reconstructed to include human interaction as a key decision-making process that directly affects the performance of financial markets.
This research paper aims to determine whether or not there is a…
Barrett, Larry. (January, 2001). Emotional investing a recipe for disaster. CNET News.com.
Bernstein, Peter. (1998). Against the Gods: The Remarkable Story of Risk. New York, NY: John Wiley & Sons.
Brennan, Phil. (March 12, 2002) The Great Stock Market Scam. NewsMax.com.
Business Week. (September 29, 1997) The Perils of Investing Too Close to Home.
Selecting Stocks for Investment Purposes
The selection of stocks for investment purposes requires conducting analysis in order to determine the most profitable stocks. There are two most common schools of thought that are utilized in conducting analysis for investment purposes are fundamental analysis and technical analysis. While some investors utilize fundamental analysis, others prefer to utilize technical analysis and others conduct both fundamental analysis and technical analysis. For instance, Warren Buffet conducts fundamental analysis whereas George Soros utilizes technical analysis for investment decisions (Chauhan, 2013). Each of these renowned investors are successful in their investments through the use of the different analysis. The use of the different methods for selecting stocks for investment purposes is attributable to the unique attributes associated with each of these analysis procedures.
Fundamental analysis is a stock valuation technique that utilizes economic and financial evaluation to forecast the movement of stock prices (Badami, n.d.). When…
Capital gains and dividend taxes were both initiated in the early 1970's, by the Democratic Party. efore dividend taxes were enforced, the government made its money through higher aftertax yields, The dividend tax was originally supposed to be a progressive measure, so that the wealthiest paid correspondingly more than the poorest because they had benefited more. At this time, only the wealthy invested in stocks. This is no longer true. Most middle-class people today are investors in the market and they do not have the expensive accountants hired by the rich to shield their investments from tax.
Investing in the stock market has become far more widespread over the last two decades, as 84 million people - representing nearly half of all American households - owning stock. Tax-deferred investment tools such as 401(k) plans and individual retirement accounts (IRAs) have placed millions of Americans who make $60,000 or…
Beach, William. (January 23, 2003). Just what our economy needs. San Diego Union-Tribune. (Berlau, John. *February 6, 2003). Accounting firm fights dividend-tax cut. WorldNetDaily. Retrieved from the Internet at http://civilliberty.about.com/gi/dynamic/offsite.htm?site=http://www.wnd.com/news/article.asp%3FARTICLE%5FID=30894.
Centre for International Co-operation and Development. (2003). Corporate Income Tax. Retrieved from the Internet at http://www.gzs.si/ENG/busenv/financ61.htm .
Edwards, Chris. (January 7, 2003). Nearly All Major Countries Provide Dividend Tax Relief. The Cato Institute. Retrieved from the Internet at http://www.cato.org/dailys/01-07-03-2.html .
Hall, Joshua. (January 31, 2003). Dumping fed dividend tax practical on several levels. Columbus Business First. Retrieved from the Internet at http://www.bizjournals.com/columbus/stories/2003/02/03/editorial3.html .
One set of concepts from each area was utilized to explain how the situation at Grand Bois may have come about. The end goal of the authors was to "provide business practitioners, ethics teachers, and readers interested in corporate conduct with insights useful in understanding why managers may act the way they do."
It could be argued, according to Hamilton and Berken (2005), that Exxon managers had made a sound business judgment, based on facts that were not known, at the time. The industry still contends that the majority of exploration and production waste contains no harmful compounds, and that for this reason the disposal techniques that are used at the Grand Bois facility were not only cost effective, but also environmentally safe.
Just because the exemption of this waste for hazardous materials was brought about by political lobbying does not mean that it is not scientifically or justified.
Beschorner, T. (2006). Ethical theory and business practices: The case of discourse ethics. Journal of Business Ethics, 66. Retrieved December 1, 2006, from ProQuest database.
Bowen, M. & Power, F. (1993 Apr). The moral manager: Communicative ethics and the Exxon Valdez disaster. Business Ethics, 3(2). Retrieved December 1, 2006, from Business Source Complete database.
Call for an extra Exxon Valdex payout. (2002). Disaster Prevention and Management, 11(3). Retrieved December 1, 2006, from ProQuest database.
Carson, S. (2006 Mar). Gert's moral theory and its application to bioethics cases. Kennedy Institute of Ethics Journal, 16(1). Retrieved December 1, 2006, from ProQuest database.
Coca Cola -- External Analysis
An external analysis of Coca-Cola (NAICS # 312111 -- Soft Drink Manufacturing) requires scrutiny of the specific industry environment with Porter's 5-Forces model and examination of the larger business environment through a PEST analysis. In his interview on YouTube, Porter speaks of the five factors of Competitive Rivalry, Threat of New Entrants, Threat of Substitute Products, Bargaining Power of Suppliers, and Bargaining Power of Buyers. He also discusses the underlying forces for each factor, examining the Airline Industry, in which all five factors are strong, and the Soft Drink Manufacturing Industry, in which all five factors are "benign," essentially making the Soft Drink Industry "a license to print money" (Harvard Business Publishing, 2008). Porter stresses the importance and flexibility of his five forces, which keeps an organization focused on "underlying fundamentals" so the organization's leadership is not tricked or trapped by the latest trend or…
Chapter 21. (2011, August 25). Retrieved February 4, 2012 from Scribd.com Web site: www.scribd.com/doc/63145097/Chapter-21
American Bar Association. (2012). ABA Journal - Law news now. Retrieved February 4, 2012 from ABAjournal.com Web site: http://www.abajournal.com/
American Demographics. (2012). American demographics - News - Advertising age. Retrieved February 4, 2012 from Adage.com Web site: http://adage.com/section/american-demographics/195
Bhasin, H. (2011, February 21). Positioning by product characteristics. Retrieved February 4, 2012 from Marketing91.com Web site: http://www.marketing91.com/positioning-product-characteristics/
Much of what passes for unassailable historical truth turns out to rest upon shaky assumptions. However all aspects of investing are not so grim it is important to have your wits about you and do proper research.
Langstaff (1999) expressed how finance and investments have never been higher. He went further to report two more avenues for growing wealth and broadening investments. The internet represents an unprecedented opportunity for personal wealth creation, and the rules of wealth creation have been, and will continue to change by the new economy. As a result, books that do well address issues of, online trading, day trading, Internet stock valuations, or other subject specific content.
The three principles to use in homeownership/real estate to build wealth are being patient, borrow money cheaply, and build a success team (Johnson, 2005).
Futrelle, D. (2004, September). Build ealth in Any Market. Money, Vol. 33(Issue 9),…
Futrelle, D. (2004, September). Build Wealth in Any Market. Money, Vol. 33(Issue 9), pp. 82-86.
Johnson, P.D. (2005, March). Progress through Properties. Black Enterprise, Vol. 35(Issue 8), pp. 61-62.
Langstaff, M. (1999, December 6). It's About the Money. Publisher Weekly, Vol. 246(Issue 49), pp. 38-44.
Mantell, S. (2004, December 13). Making Cents of Investing. Publishers Weekly, Vol. 251(Issue 50), pp. 26-30.
According to Pilarski (2007), "the financial situation of the airline industry, especially in the U.S.A., has been between disaster and catastrophe," (p. 3). Financial wizards like Warren Buffet have made "bombastic pronouncements" related to the economic illnesses of the airline industry (9). Dynamic entrepreneur ichard Branson, himself seduced by the desire to own an airline, has likewise stated, "How do you become a millionaire? Start as a billionaire, and then buy an airline," (cited in "In-Depth Drilldown Of The Airline Industry - Part 1, 2012). Airline companies operate with razor-thin profit margins, if any at all. Moreover, the situation was bad enough befofre but has grown worse since September 11. "Since 9/11, we've seen tremendous changes surrounding the airline industry: security, regulations, and operational costs. Overall, these variables have had tremendous, and far-bearing, negative impacts on the industry," ("In-Depth Drilldown Of The Airline Industry - Part 1," 2012).…
"Global airline industry profits to falter at $3bn in 2012," (2012). New Statesman. June 11, 2012 Retrieved online: http://www.newstatesman.com/business/transport/2012/06/global-airline-industry-profits-falter-3bn-2012
"In-Depth Drilldown Of The Airline Industry - Part 1," (2012). Retieved online: http://seekingalpha.com/article/644991-in-depth-drilldown-of-the-airline-industry-part-1http://seekingalpha.com/article/644991-in-depth-drilldown-of-the-airline-industry-part-1
Pilarski, A.M. (2007). Why Can't We Make Money in Aviation? Burlington, VT: Ashgate.
Pilarski, A.M. (2010). The fallacy of airline mergers: Two drunks holding unto each other will not walk straight. Centre for Asia Pacific Aviation. Retrieved online: http://www.avitas.com/publications/adampilarskiarticles/The%20Fallacy%20of%20Airline%20Mergers%20Two%20Drunks%20Holding%20Unto%20Each%20Other%20Will%20Not%20Walk%20Straight.pdf
. The mobile business market has seen significant of uptake of 2E (mobile sales-force and field service) solutions and Microsoft has the chance to develop its offerings around its acquisitions, adding mobile functionality. Microsoft partners with many application vendors across the board and moving too heavily into the application space would incense many. However, there is viability in developing a mid-market mobile application proposition, given the unconsolidated nature of offerings from operators, traditional ISVs, start-ups and mobile middleware players.
In the device OS market, as at desktop level and in the server-room, Linux clearly represents a threat to Microsoft, and one it expends much energy playing down. Although there has been little uptake of Linux to date specifically as an operating system for multimedia cell phones, there are many who are not keen to implement end-to-end Microsoft solutions. Linux will give these companies added freedom in choosing applications, middleware…
Ovum Research (2006) - Worldwide Multimedia Cell Phone Forecast.
Source: Credit Suisse First Boston Analysis of the Multimedia Cell Market (2006)
Flextronics (2006) - Annual Report and key investor5 briefing materials. Accessed from the Internet on November 29, 2006 http://www.flextronics.com/en/Investors/ConferenceCalls/tabid/69/Default.aspx
IDC (2006) - Worldwide Multimedia Cell Phone Forecast. Framingham, MA. Published July, 2006.
Yahoo Finance: http://finance.yahoo.com/q/p?s=cpki
This site is vey useful fo helping to establish an awaeness and undestanding of Califonia Pizza Kitchen's cuent esouces, especially its financial esouces. Statistics and figues pesented on this page and pages linked to this page (also belonging to Yahoo Finance and compising futhe pages of the epot that this URL is the fist page of) give a clea undestanding of CPK's cuent assets as well as its stock valuation, which gives some indicato of the confidence that exists in the band. Company and industy oveviews ae also given that enable some degee of undestanding egading othe tangible and intangible esouces that the company possesses. Yahoo's financial and industy data is culled diectly fom company epots, pess eleases, and othe eliable souces, and thus the data and infomation found on the Yahoo Finance website is also quite eliable.
Hooves: http://www.hooves.com/califonia-pizza-kitchen/--ID__47669 -- /feeuk-co-factsheet.xhtml
Simila in many ways…
references list; though otherwise online encyclopedias -- even those that are not openly edited -- are somewhat suspect, this information can be verified with a few hours in the library and is likely quite reliable.
Tera vs. Netflix
TEVA VS. NETFLIX
Teva, which you likely do not even know (Northrup, 2010), has won its business game by betting its success on products with a true future, while Netflix, stuck with a well-known brand name, appears to be dying the death of overconfidence. Technically, Teva could still do less well than anticipated because the market they are in -- the production of generic drugs and the ingredients that allow for making generic drugs -- is coming up for grabs. But right now they are seen as a clear success. Netflix, on the other hand, has not actually failed -- at least not yet. But they do seem to be doing their best to act like they should. At least one well-known investor has sounded my warnings and believes that Netflix has all but disappeared, even in the face of a number of possible industry opportunities (ChartProphet,…
IMAP (2011). Pharmecueticals & Biotech Industry Global Report 2011. IMAP, Inc. Retrievable from http://www.imap.com/imap/media/resources/IMAP_PharmaReport_8_272B8752E0FB3.pdf .
Krause Fund (2010). Health Care -- Teva Pharmeceuticals. Spring. Retrievable from http://tippie.uiowa.edu/krause/spring2010/teva_sp10.pdf .
Northrup, L. (2010). Teva Pharmeceuticals: The ubiquitous company you've never heard of. The Consumerist. Viewable at http://consumerist.com/2010/05/teva-pharmaceuticals-the-ubiquitous-company-youve-never-heard-of.html . Accessed April 25, 2012.
Failing Business OD
One of the most bewildering business phenomena is also one of the most common: whenever flourishing firms encounter large changes in their surrounding, they frequently fail to effectively respond. Incapable of defending themselves against competitors equipped with new strategies, products, or even technologies, they look at their best people go away, their sales and earnings erode, and their stock valuations drop. Others eventually manage to recover (normally after tedious rounds of downsizing and restructuring), however, majority do not. What is the reason that makes good companies go bad? It is regularly presumed that paralysis is the issue. Faced with interference in business conditions, companies tend to freeze; they get caught like the proverbial deer in the headlights. However, that explanation does not actually match the facts. In researching once-successful companies, which have struggled in the face of change, I have discovered little proof of paralysis. The besieged…
Dahia, G., Deol, N., Foronda, M., Jia, Q., & Reid, T. (2012). Knowledge Dissemination: "Effective Change management and leadership. HRMT 4125: Organizational Development. Kwantlen Polytechnic University.
Ehmke, C., & Akridge, J. (2007). The Elements of a Business Plan: First Steps for New Entrepreneurs. Agricultural innovation & commercialization center of Purdue University: West Lafayette.
Ferrara Consulting Group. (2006). Defining Business Operations within The Organization. Ferrara Consulting Group, LLC.
Gill, K. (2012, November 8). Overcoming Barriers to Change. Retrieved Febuary 11, 2016, from http://hrmt4125.blogspot.com.ng/2012/11/overcoming-barriers-to-change.html
Stocks and Bonds Basics
There are a number of different types of bonds that are existent. These bonds are typically redeemable in different ways and for different types of value. For instance, a convertible bond is the type that one can redeem for stock options at various prices (Yamam, 2014, p. 63). The number of stock options for which it can be redeemed varies, which affects the valuation of the bond. Another type of bond is a pure discount bond, which must mature before it can be redeemed for cash. Once such a bond does mature, however, it is always redeemable for its face value -- which certainly contributes to the factors for the valuation of this variety of bond. Other types of bonds include a callable bond. This bond enables the entity that has disseminated the bond to buy it back. However, the bond issuer can only repurchase this…
Newton, H. (2015). Common stock. Research Starters. Retrieved from http://eds.a.ebscohost.com.library.gcu.edu:2048/eds/detail/detail?sid=4e161b6e-158e-49b5-ab52-f46b3758794f%40sessionmgr4001&vid=4&hid=4108&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d#AN=89163588&db=ers
Yamam, D. (2014). Does the sequence of convertible bonds matter? Journal of Finance, Accounting & Management. 5(1), 63-87.
Amazon and eBay. Both companies were among the first movers into the Internet. Amazon opened the doors to its online store in July, 1995 and completed its initial public offering in 1997. eBay was also founded in 1995 and went public in 1998. These two companies have always been among the leaders in e-commerce. Amazon began with a focus on books and music. It soon expanded its product lines significantly to become a general merchandiser. Amazon is also an intermediary for third party vendors. eBay has always played the intermediary role. Unlike Amazon, where goods are offered for sale, eBay has used an auction platform in order to move its goods, taking a fee on the sale. Both companies remain as industry leaders. Amazon has withstood challenges from leading bricks and mortar retailers to remain as the number one vendor on the Internet (Internet Retailer, 2012). eBay has struggled to…
Amazon.com website, various pages. Retrieved December 4, 2012 from http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-faq#6986
Asay, M. (2012). PayPal is bleeding market share and it's all eBay's fault. The Register Retrieved December 4, 2012 from http://www.theregister.co.uk/2012/07/18/ebay_paypal/
Bosman, J. (2012). The bookstore's last stand. New York Times. Retrieved December 4, 2012 from http://www.nytimes.com/2012/01/29/business/barnes-noble-taking-on-amazon-in-the-fight-of-its-life.html?pagewanted=all&_r=0
eBay website, various pages. Retrieved December 4, 2012 from http://www.ebayinc.com/history