1 RELATIVE VALUATION Introduction 2 The majority of equity research reports are based on multiples Most analysts use relative valuation because it is safer It is a short term strategy Forward multiples are better then historical ones because the price is related to expected cash flow Relative valuations usually means that you need to: 1. 2. 3. Come up with comparable companies Standardize by dividing by something common to all stocks Compare based on
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Finance 3101: Financial Management Syllabus (Spring 2013) Section: 101 Time/Room: TR 12:30 P.M. – 1:50 P.M. / 208 Ambler Learning Ctr. Course Coordinator: Dr. Howard Keen (“DRK”) Course Instructor: James Dooley Office Hours: By Appointment E-mail Address: jsdooley@verizon.net Office Telephone: 215-498-0157 Prerequisites |Economics 1101 (C051) and 1102 (C052); Accounting 2102 (0002) or 2521. Statistics 2101 (C021) or 2103
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Fourth Edition Financial Statement Analysis & Valuation Peter D. Easton University of Notre Dame Mary Lea McAnally Texas A&M University Gregory A. Sommers Southern Methodist University Xiao-Jun Zhang University of California, Berkeley Cambridge Business Publishers To my daughters, Joanne and Stacey —PDE To my husband Brittan, and my children Loic, Maclean, Quinn and Kay —MLM To my wife Susan, and my children Christian, Peter and Philip —GAS To my wife
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Solutions for Chapter 12 Audit of Cash and Other Liquid Assets Review Questions: 12-1. It is important that cash and liquid asset testing be coordinated because the assets can be quickly moved and thus substituted for each other. For example, an organization could quickly move assets between cash and certificates of deposit. 12-2. General Cash Account. This is the account used to transact most of the organization's cash transactions. It is usually a high volume, but low balance account
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is the before-tax cost of debt and T = tax rate. Likewise, rd = AT/(1 – T). (rd = YTM on bonds) Cost of preferred stock= rp =Dp/Pp; where Dp is annual dividend payment per share and Pp is the preferred stock price per share. Cost of Retained Earnings= rs Constant growth model: rs = D1/Po + g; D1 = Do(1 + g) CAPM model rs = rrf + (rm – rrf)b Cost of New Common Stock (re): D1 re = --------- + g where Pn = net price = Po(1 – F%)
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Study Guide Financial Management: Theory & Practice Fourteenth Edition Eugene F. Brigham University of Florida Michael C. Ehrhardt University of Tennessee ________________________________________________________________________________ Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third
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Table of Content: Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies Principles of Consolidation Description of the Company New Accounting Pronouncements Cash and Cash Equivalent Inventories Investments Property, Plant and Equipment and Depreciation Earnings per Share Revenue Recognition Research and Development Use of Estimates Income Taxes Annual Closing Date 2. Cash, Cash Equivalents and Current Marketable Securities 3. Inventories 4. Property, Plant and
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of the efficient market is we assume the prices of securities are fully reflective of all publicly known information about the security at all time. For Philip Service Corp. case, the head of this public company tried to artificially inflate its stock price by falsely overstating the amounts of Philip’s goodwill and inventory. The information which affected the price was the inventory and goodwill being overstated. Did this information belong to the publicly known information? The answer is no.
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the entity. * And that the inventory quantities have been accurately determined. * Check to see that all purchases and sales of inventory have been recorded in the accounting system. * That disclosures relating to classification and valuation are sufficient. * Inventory is properly stated at the lower of cost and net realizable value. * All purchases and sales of inventory are recorded in the correct accounting period. * That inventory transaction and balance are properly
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Q2 Required a. Based on the information provided, do you expect the gross margin as a percent of sales and inventory turnover to remain consistent with prior years, to increase, or to decrease? Explain your reasoning. (2 marks) The gross margin is expected to stay in consistence with prior years despite the declining demanddue to incresed gasoline price and decreased cost of air travel. The managements decission to introduce 1000 dollar cash rebate may have caused an increase in sales. The
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