multiples I N T R O DU C T I O N T O VAL U AT I O N Transaction multiples 1 What does the term “value” mean?1 The Oxford Dictionary definition “the material or monetary worth of a thing; the amount at which it may be estimated in terms of some medium of exchange or other standard of a like in nature” It is important to note that there is no general statutory definition of value Valuation is an art‚ not a science2 I N T R O DU C T I O N T O VAL U AT I O N In practice‚ we
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Capital Budgeting Capital Budgeting is done because companies need to make Acceptance/rejection decisions for buying fixed assets etc. Features of fixed assets : Investments upfront and returns take a long time. Risk is long term Expenses are indivisible and lumpy Ex. If HUL wants to put up a synthetic detergent plant of 50 cr. Rs. -> by spending 25 Cr. Rs.‚ the plant wont be operational at half the capacityS The Capex decisions are irreversible Projected P&L : Less Sales Raw Materials
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knowledge of financial management. Financial management is largely about decisions‚ decisions about what assets or products to invest in‚ how to manage cash and how to raise funds for growth. Topics include the role of corporate finance‚ cash flow and financial statement‚ time value of money‚ discounted cash flow valuation‚ interest rate and bond valuation‚ stock valuation‚ net present value‚ and making capital investment decisions. Text Book Stephen A. Ross‚ Randolph W. Westerfield‚ and
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appropriately manage their working capital? Why? “ Working capital is defined as the difference between current assets and current liabilities” (SBA‚ 2013). It’s the total amount of cash or inventory that can quickly be converted into cash or assets in order to grow an organization. Working capital is calculated by subtracting all the years liabilities from the total current assets. It’s what’s leftover to invest. Having to much working capital is never necessarily a bad thing in todays market
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non-factor in determining the profitability of the Super Project. Simply adding the cost of erosion to Jell-O’s sales ought to be sufficient in rectifying the costs of switching the machine’s function. Before we could begin to calculate the net present values of the base case and the fully allocated costs method it was necessary to determine an appropriate discount rate. In order to do this we calculated the weighted average cost of capital by determining that General Foods Corporation return on
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Table of contents: Page no. 1. Introduction 1 2. Investment appraisal 2 3. Payback method 3 4. Present value (PV)‚ future value (FV) and net present value (NPV) 5 5. Project 1 6 6. Comparing projects 11 7. Conclusion 12 8. References 13 9. Bibliography 14 Introduction: In 21st century business is much more developed and competitive as well with the presence of so many competitors
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different methods of capital investments appraisal technique. Investment appraisal helps the managers when they plan for the long term strategy for the organization. In this strategy they take decision on amount which they need to invest in fixed assets and also in working capital‚ in order to increase and maintain the productive efficiency of an organization. Normally business managers have many choices to take in the shape of different projects or also each project requires different type of
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International Project Financing In partial fulfillment of the degree of Master of Finance & Control Submitted by: Deepti Jayam Roll no 1830 Department of Financial Studies University of Delhi South Campus Internal supervisor: External supervisor: Dr. V. K. Vasal Mrs. Chetna Khuller Department of Financial Studies Head Treasury and Finance University of Delhi South Campus NIIT Lt. New Delhi. New Delhi
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Maximization: Wealth maximization has been accepted by the finance managers‚ because it overcomes the limitations of profit maximization. Wealth maximization means maximizing the net wealth of the company’s share holders. Wealth maximization is possible only when the company pursues policies that would increase the market value of shares of the company. There are some arguments which are superior in wealth maximization: Wealth maximization is based on the concept of cash flows. Cash flows are a
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evaluation process except a company’s a. board of directors. b. capital budgeting committee. c. officers. d. stockholders. 28. Most of the capital budgeting methods use a. accrual accounting numbers. b. cash flow numbers. c. net income. d. accrual accounting revenues. 29. The first step in the capital budgeting evaluation process is to a. request proposals for projects. b. screen proposals by a capital budgeting committee. c. determine which projects are worthy
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