...PLEASE REVIEW THIS ARTICLE BASED ON EMBEDDED COMMENTS/QUESTIONS. Harvard Business Review January 1987 / February 1987 How to Measure Yourself Against the Best Frances Gaither Tucker; Seymour M Zivan; Robert C Camp ABSTRACT: The Logistics and Distribution unit of Xerox's Business Systems Group was gaining 3% to 5% a year in productivity not good enough in light of industrywide price cuts in business machines. One solution, benchmarking, measures L&D's warehouse and distribution performance against comparable activities in other industries. Comparing oneself with competitors (as well as with internal units) is useful, but doesn't necessarily get the benefit of the best practice, not to mention the benefit of cooperation. Benchmarking against non-competitors is the answer. After a search, L&D found the best warehousing and materials handling organization was at L.L. Bean, the outdoor-clothing retailer and mail-order house. With Bean's cooperation, L&D benchmarked its operation against the best and learned a lot. By looking closely at the operation of Bean and other noncompetitors, L&D has raised its productivity 10% each year and gained a better position against its real competition. BODY: One way to judge the performance of an organization is, of course, to compare it with other units within the company. But these measurements often merely reinforce complacency or generate "not invented...
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...------------------------------------------------- Ryan Tedders 7525 SW 9th Street, Okeechobee FL 34974 Home: 863-763-6563 Cell: 863-801-4455 rjtedders@gmail.com Summary: I graduated in May 2015 through Indian River State College with my degree in Business Administration. I have over 100 community service hours and have won multiple awards for Creative Writing. I plan to be a teacher, tutor, and published author in ten years. Highlight: * Strategic and financial planning expert * Honors student * Strong worth ethics * Winner of multiple writing contests (both creative fiction and nonfiction) * Eligible for multiple honors society clubs in both high school and college. * 3.5 GPA in both high school and college. * Dual-enrollment student from Summer of 2013 to Spring of 2015 leading to early college graduation. Accomplishments: Earning AA degree in Business Administration before high school graduation, earning first place in IRSC Creative Writing Contest during sophomore year of high school, earning “semi-finalist” in international 2013 We The Living essay contest sponsored by Ayn Rand Institute. Experience: Okeechobee Police Department Assistant to Secretary 50 Southeast 2nd Avenue, Okeechobee, FL 34972 Applebee’s Carside Specialist 1210 FL-70, Okeechobee, FL 34972 Applebee’s Host 1210 FL-70, Okeechobee, FL 34972 Pemayetv Emahakv Charter School Summer School Program Tutor 100 E Harney Pond Rd Ne, Okeechobee, FL, 34974 ...
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...Identify the components of a stock’s realized return. “The realized return is the total realized return that happens during a specific period (Jonathan Berk, 2010, p. 388).” The components consist of the stock price that it was bought, the price it was sold, and also the dividend. To calculate the stock’s realized return begin by dividing the dividend by amount that it was bought and adding it to the difference between the amount that it was sold by the amount that it was bought and finally dividing that by the amount that it was bought (Jonathan Berk, 2010, pp. 338-341). This will be the last component to a realized return. Contrast systematic and unsystematic risk. “Unsystematic risk is fluctuations of a stock’s return that are due to company or industry specific news” (Jonathan Berk, 2010, p. 353). This is associated with random causes that can be eliminated through diversification. It’s attributed to firm-specific events such as strikes, lawsuit, regulatory actions, or a loss of a key account. Unsystematic risk is due to factors specific to an industry like labor unions, product category, research and development, pricing, or marketing On the other hand, systematic risk occurs when fluctuations of the stocks returns are changed because of market wide news (Jonathan Berk, 2010, p. 353). These market factors may include situations such as war, inflation, international incidents, or political events. It may be eliminated through diversification and the combination of...
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...of $50.00, the $2 dividend, and the 15% cost of capital. Execute: 50 = 2+ X 1.15 X = 55.50 Evaluate: At a current price of $50, we can expect Evco stock to sell for $55.50 immediately after the firm pays the dividend in 1 year. 5. Plan: We can rearrange Eq. 7.1 to find the cost of capital given the current stock price of $20, the $1 expected dividend, and the expected stock price right after paying the dividend of $22. We can use Eq. 7.2 to calculate the dividend yield and the capital gain. Execute: rE = Div1 + P1 −1 P0 P − P0 Div1 + 1 = P0 P0 Capital Gain Rate Dividend Yield rE = 1 22 − 20 + 20 20 = 0.15 = 15% © 2012 Pearson Education, Inc. Publishing as Prentice Hall 82 Berk/DeMarzo/Harford • Fundamentals of Corporate Finance, Second Edition Dividend Yield: 5% (1/20)...
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...Task 3 Net income = 51 350 Cash dividends = 15 000 Addition to retained earnings = Net income – Cash dividends = 51 350 – 15 000 = 36 350 Task 4 Earnings per share = Net income/Total share outstanding = 51 350/20 000 = 2,5675 Dividends per share = Cash Dividends/Total share outstanding = 15 000/20 000 = 0,75 Task 5 Current assets = Net working Capital + Current liabilities = 600 000 + 750 000 = 1 350 000 Book value current assets = 1 350 000 Book value net fixed assets = 750 000 Book value assets = 1 350 000 + 750 000 = 2 100 000 Market value current assets = 1 500 000 Market value net fixed assets = 2 000 000 Market value assets = 1 500 000 + 2 000 000 = 3 500 000 Task 6 Tax rate = 39% Taxable income = 145 000 Income taxes: 1) 0,15 * 50 000 = 7 500 2) 0,25 * (75 000 – 50 000) = 6 250 3) 0,34 * (100 000 – 75 000) = 8 500 4) 0,39 * (145 000 – 100 000) = 17 550 Total income tax = 1 + 2 + 3 + 4 = 39 800 Task 7 Average tax rate = Total income tax/Net income = 39 800/145 000 = 27,45% Marginal tax rate = 39% Task 11 Cash flow to cresitors = Interest paid - Net new borrowing = 700000-900000=-200000 Task 12 Cash flow to stockholders= Dividents paid - Net New equity raised = 300000-450000=-150000 Task 13 Відповіді з 11 і 12 разом формують cash flow from assets. OCF = Net capital spending + Change in NWC + cash flow from assets = 500000-135000-200000-150000=15000 Task 14 65 000 - 41 000 - 3 000 - 1 750 = 19 250 EBIT 19 250 - 7 000 = 12 250 Taxable income ...
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...Fundamental & Technical Analysis of Prime Bank Ltd. Technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis on the other hand looks at economic factors which are known as fundamentals. Fundamental & Technical Analysis of Prime Bank Ltd. Group:16 Department of Finance. Jagannath University, Dhaka Page Fundamental & Technical Analysis of Prime Bank Ltd. Submitted To, Kawser Ahmed Shiblu Lecturer Department of Finance Jagannath University, Dhaka Submitted By Uttam Golder On the behalf of Group: 16 Department of finance Jagannath University, Dhaka Department of Finance. Jagannath University, Dhaka Page i Fundamental & Technical Analysis of Prime Bank Ltd. List of Group Member Serial 1. 2. 3. 4. 5. Name Uttam Golder Rajib Chandra Banik Md. Monir Hossain Joy Roy Choudhury Md. Al-Masur Rahaman Khan ID M 130203004 M 130203025 M 130203069 M 130203033 M 130203077 Department of Finance. Jagannath University, Dhaka Page ii Fundamental & Technical Analysis of Prime Bank Ltd. Letter of Transmittal February 15, 2015 Kawser Ahmed Shiblu Lecturer Department of Finance, Jagannath University, Dhaka Subject: - Submission of report on “Fundamental & Technical Analysis of Prime Bank Ltd.” Dear Sir, With due respect, we would like to state that it is a matter of great pleasure and honor for us to submit our report on...
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...Introduction Efficient market hypothesis is widely accepted by academic community as a cornerstone of modern financial theory. Fama (1970) gives detailed definition of this theory and states that efficient market is a market that stock prices quickly and fully reflect all available and newly released information, where majority of participants are rational in their decision making process and where an investor is not able to outperform the market through any analyses, because of actual price of stock shows its intrinsic value. Naturally such revolutionary hypothesis did not occur suddenly. In 1990 Louis Bachelier in his "Theory of Speculation" paragraph gave definition of informational efficiency of the market. This study was not being developed until 1953 when Maurice Kendall who postulated that stock prices movement follow the random walk theory. Further enhancement of these studies associated with the name of Eugene Fama who gave comprehensive resume of efficient market hypothesis, as well as empirical evidences to support it and defined three form of efficient market: weak, semi-strong and strong in 1970 (Dimson and Mussavian, 1998). Later several different researches have been carried out by financial academics which continuously underpinned efficient market hypothesis. Consequently this theory began widely use by investors for investment decision making process. However only after two decades this hypothesis began less dominance in the market. Several crashes, changing...
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...PLEKHANOV RUSSIAN UNIVERSITY OF ECONOMICS INTERNATIONAL BUSINESS SCHOOL COURSE WORK « Business Valuation on the basis of Damodaran model » Corporate Finance Student: Pavel Terefera Supervisor: Irina Sokolnikova Moscow 2015 Contents Introduction _____________________________________________ 3 Chapter 1. Valuation______________________________________ 4 1.1 Valuation in portfolio management_________________________ 7 1.2 Valuation in acquisition__________________________________ 10 1.3 Valuation in corporate finance_____________________________ 10 Chapter 2. Approaches to Valuation___________________________ 11 2.1 Profitable Approach_____________________________________ 12 2.1.2 Income capitalization approach __________________________ 12 2.1.3Method of discounted cash flows__________________________ 14 2.1.4 Discounted Cash Flow Valuation on example of JSC NLMK____ 20 2.2 Relative Valuation Approach______________________________ 23 Conclusion _______________________________________________ 28 Bibliography ______________________________________________ 29 Introduction. Knowing the value of an asset may not be a guarantee for success for investor, but it does help us make more informed judgments. A postulate of sound investing is that an investor does not pay more for an asset than its worth. In conditions of market economy when all transactions are made "on fear and risk" their participants, both seller...
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...27 THE BASIC TOOLS OF FINANCE WHAT’S NEW IN THE SIXTH EDITION: There are two new In the News boxes on “A Cartoonist’s Guide to Stock Picking” and “Is the Efficient Markets Hypothesis Kaput?” LEARNING OBJECTIVES: By the end of this chapter, students should understand: the relationship between present value and future value. the effects of compound growth. how risk-averse people reduce the risk they face. how asset prices are determined. CONTEXT AND PURPOSE: Chapter 27 is the third chapter in a four-chapter sequence on the level and growth of output in the long run. In Chapter 25, we discuss how capital and labor are among the primary determinants of output and growth. In Chapter 26, we addressed how saving and investment in capital goods affect the production of output. In Chapter 28, we will show some of the tools people and firms use when choosing capital projects in which to invest. Because both capital and labor are among the primary determinants of output, Chapter 28 will address the market for labor. The purpose of Chapter 27 is to introduce the students to some tools that people use when they participate in financial markets. We will show how people compare different sums of money at different points in time, how they manage risk, and how these concepts combine to help determine the value of a financial asset, such as a share of stock. KEY POINTS: Because savings can earn interest, a sum of money today is more valuable than the same sum of money...
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...“When the price of a stock can be influenced by a “herd” on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical.” ------------------------------------------------- This report will analysis the statement by Warren Buffett, and it considers the contrasting evidence on the validity of the observation on the Efficient Markets Hypothesis. The report briefly outlines the forms of the Efficient Market Hypothesis, the report also analysis’s the evidence both seminal and recent on the theory relating to the three forms of the hypothesis. It also examines the theoretical role and motivation of analysts in creating market efficiency; lastly it looks at alternative perspectives on the pricing of securities. Introduction In 1984 Warren Buffett penned an article titled “The Superinvestors of Graham-and-Doddsville”, based on a speech he had given on the occasion of the 50th anniversary of his mentor Ben Graham’s legendary textbook, Security Analysis. In it, Buffett rejected the then growing (and now entrenched) view in academia that markets are ''efficient'' because ''stock prices reflect everything that is known about a company’s prospects and about the state of the economy.'' Warren Buffett argued against EMH, saying the preponderance of value investors among the world's best money managers rebuts...
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...based on contrarian strategies Zhongzhi (Lawrence) He Faculty of Business, Brock University, St Catharines, Canada, and Reformulated asset pricing model 185 Lawrence Kryzanowski John Molson School of Business, Concordia University, Montreal, Canada Abstract Purpose – Researchers have proposed characteristics-based pricing models as an alternative to risk-based pricing models. While supported empirically, these characteristic-based models lack theoretical support. This paper seeks to reformulate an asset-pricing model (RAPM) to demonstrate why firm characteristics help to explain stock returns. Design/methodology/approach – The RAPM is grounded in an economic setting where two groups of agents hold different beliefs about firm fundamental values, and the more sophisticated ¨ group (rationals) adopts contrarian strategies against the naıve group (quasis). The model is derived in a static equilibrium within the consumption-investment framework with heterogeneous agents. Findings – The key theoretical result is a parsimonious equation of cross-sectional expected returns that not only are specified by the traditional risk-return relation, but also are determined by contrarian adjustments at both market-wide and firm-specific levels. When the model is taken to empirical specifications, it leads to consistent explanations for the behaviors of growth and value stocks, and for size and book-to-market effects. Research limitations/implications – The RAPM is a one-period model that assumes...
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...if they are too high or too low. EMH does not imply that bubbles in asset prices are impossible nor does it deny that environmental and behavioral factors cannot have profound influences on required rates of return and risk premiums. At its core, EMH implies that arbitrage opportunities for riskless gains do not exist in an *Princeton University. I am indebted to Alan Blinder and to the participants in the Russell Sage Conference on Economic Lessons From the Financial Crisis for extremely helpful comments. 2 efficiently functioning market and if they do appear from time to time that they do not persist. The evidence is clear that this version of EMH is strongly supported by the data. EMH can comfortably coexist with behavior finance, and the insights of Hyman Minsky are particularly relevant in eliminating the recent financial crisis. Bubbles, when they do exist are particularly dangerous when they are financed with debt. And the housing bubble and its associated derivative securities left both the consumer and financial sectors dangerously leveraged. Policy makers are unlikely to be able to identify bubbles in advance, but they must be better...
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...studied further by Paul Cootner, an MIT Sloan School of Management professor, in his 1964 book The Random Character of Stock Market Prices. The term was popularized by the 1973 book, A Random Walk Down Wall Street, by Burton Malkiel, a professor of economics at Princeton University, and was used earlier in Eugene Fama's 1965 article "Random Walks In Stock Market Prices”. The theory that stock prices move randomly was earlier proposed by Maurice Kendall in his 1953 paper, “The Analytics of Economic Time Series, Part 1: Prices”. To further the understanding of the random walk hypothesis, the discussion of the two techniques used in the prediction of stock prices. These two are (1) chartist or technical techniques and (2) the theory of fundamental or intrinsic value analysis. The assumption with chartist or technical techniques is that history tends to repeat itself. Thus, previous data...
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...International Research Journal of Finance and Economics ISSN 1450-2887 Issue 30 (2009) © EuroJournals Publishing, Inc. 2009 http://www.eurojournals.com/finance.htm Fundamental Analysis Strategy and the Prediction of Stock Returns Jaouida Elleuch* Faculty of Economics and management sciences (FSEG), University of Sfax, Tunisia E-mail: Elleuchj@yahoo.fr Abstract This paper examines whether a simple fundamental analysis strategy based on historical accounting information can predict stock returns. The paper’s goal is to show that simple screens based on historical financial signals can shift the distribution of returns earned by an investor by separating eventual winners stocks from losers. Results show that historical accounting signals can be used to improve the entire distribution of future returns earned by an investor. In fact, despite the overall down activity of the market over the sample period chosen, results reveal that fundamental accounting signals can be used to discriminate from an overall sample generating future negative returns of -0,116 a winner portfolio that provide positive future return of 0,019 from a loser one generating a negative return of -0,229. The over-performance of the winner portfolio seems to be attributable to the ability of the fundamental signals to predict future earnings. In fact, results show that fundamental signals have a positive and significant correlation with future earnings performance and that the winner portfolio have a future...
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...Chapter 16: Market efficiency: Concept of market efficiency An efficient market has been defined as one in which the prices of securities fully reflect all available information. This requires that the reaction of the market prices to new information should be instantaneous and unbiased. If such conditions exist, it will not be possible (except by chance) to employ either past information or a mechanical trading strategy to generate returns in excess of the returns warranted by the level of risk involved. In short, consistent excess profits will not be made. Or in an efficient market it is not possible to consistently make an abnormal return. Statement 1 What would cause a market to be efficient? The main argument in support of efficiency is the existence of a competitive market in which numerous investors are competing in an effort to make abnormal returns. It is suggested that, in such a market, investors will seek information and take immediate action to buy or sell securities based on any new information. As a result, information will be impounded very quickly in market prices. Market efficiency may be improved by an increase in the quantity and quality of information that is made publicly available, and a reduction in restrictions on insider trading. Statement 1 * New information regarding securities comes to the market in random fashion. * Profit maximising investors cause security prices to adjust rapidly to reflect the effect of new information. ...
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