marginal rates b. When calculating the WACC Joanna used a single cost of capital as she believes that only the Cole-Hann business is different, given this only makes up a small part of revenues and all other businesses were sports related, this makes some sense however BEHH, chapter 10 and our course lecture state we should use different cost of capitals for each business. c. Joanna uses book values to calculate cost of debt; BEHH, chapter 10 and class lecture advise us to use market values
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is far too complex and complicated for their skill sets. Consequently, they either depend upon those that they regard as professionals (equity research analysts, appraisers) for their valuations or ignore value entirely when investing. In this book, I hope to show that valuation,
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income and cash flow Calculate a firm’s cash flow 2-1 2.1 The Balance Sheet （资产负债表） An accountant’s snapshot of the firm’s accounting value at a specific point in time The Balance Sheet Identity is: Assets ≡ Liabilities + Stockholder’s Equity 2-2 U.S. Composite Corporation Balance Sheet 2-3 Alphabet Inc. - Assets Assets As of December 31, 2014 As of December 31, 2015 Current assets: Cash and cash equivalents Marketable securities Total cash, cash equivalents
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.......................................................................................... 2 Free cash flow and agency theory .................................................................................................. 3 Free cash flow to equity ................................................................................................................ 3 Free cash flow to the firm........................................................................................................
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Polaroid Corporation 1996 Executive Summary Polaroid faces several business risks in March of 1996 that will affect its financing policy. Traditionally a one-product-line company, Polaroid still derives 90% of its revenues from photographic products. Although the company enjoys a monopoly on instant chemical photography, digital imaging technologies pose a substantial threat. It is not clear how fast these technologies will develop or displace conventional photography, but it is clear that
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of the value of the Newtownabbot Borough Council (NBC) waste collection contract. In order to assist decision making the regard to minimum tender price to NBC Net present Value and Internal Rate of return are presented here, assuming NBC receives costs savings of 15% as experienced by other Councils which have outsourced. Additional assumptions are made with regard to Population growth, number of households, tonnage of waste collected and changes recycling rates during the lifetime of the contract
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stockholders’ equity * president’s letter or supplementary schedules in the corporate annual report, prospectuses, reports filed with government agencies, news releases, management’s forecasts, and social or environmental impact statements * Managerial accounting – process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, control, and evaluate a company’s operations * Capital Allocation – process of determining how and at what cost money
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term ‘leverage’ is used to describe the firm’s ability to use fixed cost assets or funds to increase the return to its owners; i.e. equity shareholders. In other words, the fixed cost funds i.e. debentures & preference share capital act as the fulcrum , which assist the lever i.e. the firm to lift i.e. to increase the earnings of its owner i.e. the equity shareholders. If earnings less the variable costs exceed the fixed costs i.e. preference dividend & interest on debenture, or earnings before
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−1 Profitability Ratios Gross Margin Operating Margin Net Margin Return on Assets (ROA)2 Return on Beginning Equity (ROBE)3 Return on Invested Capital (ROIC)4 Pretax Return on Invested Capital Gross Profit Sales EBIT Sales Net Income Sales EBIT(1-Tax Rate) Average Total Assets Net Income Beginning Equity EBIT(1-Tax Rate) Interest-bearing Debt + Equity EBIT Interest-bearing Debt + Equity 1 n denotes the number of periods between observations Xt and Xt−n . Ratios that compare balance sheet and
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−1 Profitability Ratios Gross Margin Operating Margin Net Margin Return on Assets (ROA)2 Return on Beginning Equity (ROBE)3 Return on Invested Capital (ROIC)4 Pretax Return on Invested Capital Gross Profit Sales EBIT Sales Net Income Sales EBIT(1-Tax Rate) Average Total Assets Net Income Beginning Equity EBIT(1-Tax Rate) Interest-bearing Debt + Equity EBIT Interest-bearing Debt + Equity 1 n denotes the number of periods between observations Xt and Xt−n . Ratios that compare balance sheet and
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