App13A_SW_Brigham_778322_R2 12/24/02 5:14 AM Page 13A-1 13A ILLUSTRATION OF THE THREE DIVIDEND POLICY THEORIES Figure 13A-1 illustrates the three alternative dividend policy theories: (1) Miller and Modigliani’s dividend irrelevance theory‚ (2) Gordon and Lintner’s bird-in-thehand theory‚ and (3) the tax preference theory. To understand the three theories‚ consider the case of Hardin Electronics‚ which has from its inception plowed all earnings back into the business and thus has never paid
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5.1.3 EBIT / Total Assets 10 5.1.4 Interest Expense / Total Assets 10 5.1.5 Net Before Tax / Total Assets 10 5.1.6 Total Assets / Common Equity 10 5.1.7 Net Before Tax / Common Equity 10 5.1.8 Tax Retention on Ratio 10 5.1.9 Return on Equity 10 6 Valuation Assumptions 11 6.1 Required Rate of Return (CAPM) 11
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Corporate Finance (Berk/DeMarzo) Chapter 9 - Valuing Stocks 9.1 Stock Prices‚ Returns‚ and the Investment Horizon 1) Which of the following statements is false? A) There are two potential sources of cash flows from owning a stock. B) An investor will be willing to pay a price today for a share of stock up to the point that this transaction has a zero NPV. C) An investor might generate cash by choosing to sell the shares at some future date. D) Because the cash flows from stock are known with certainty
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Financial Appraisal 1.0 Analysis This report provides an analysis of the performance of ITE Group over three consecutive years (2007-2009)‚ using various financial ratios; for the benefit of potential shareholders‚ lenders or suppliers. The report also indicates how non-financial performance indicators can help an organisation measure performance. This report will also look into the net present value method of appraisal‚ and explain its advantages and disadvantages. 2.0 Main Content The
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4% 21.6% Return on Assets 14.0% 16.6% 13.2% 17.1% Gross Profit Margin 58.8% 61.3% 58.2% 59.0% Profit Margin 4.9% 5.6% 4.8% 6.2% Net Profit Margin 3.8% 4.4% 3.3% 4.6% Detailed calculation on Appendix 2 (a) (b) Ratios 2012 2011 2010 2009 Return on Equity 17.3% 20.6% 15.4% 21.6% Return on Assets 14.0% 16.6% 13.2% 17.1% Gross Profit Margin 58.8% 61.3% 58.2% 59.0% Profit Margin 4.9% 5.6% 4.8% 6.2% Net Profit Margin 3.8% 4.4% 3.3% 4.6%
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1. (45 points) Calculate the value of Carborundum (on an aggregate and per share basis) using both the Free Cash Flow to Capital (FCFcap) and Free Cash Flow to Equity (FCFeq) methods. Use the following assumptions: Note: Rf=5.6%; MRP=8.8%‚ Carborundum’s levered beta (prior to deal)=1.16 FCFeq=Net Income + Non Cash Deductions-Capital Expenditures-Change in Net Working Capital-Debt Repayment+ Debt Issuances + Miscellaneous Extras Answer: Value of Kennecott using FCFcap is: $53.8 Value of Kennecott
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etc. 4. Financial analysis of the company‚ which involves analyzing the financial statements like balance sheets‚ income statements‚ cash flows and ratios. 5. Valuation‚ which attempts to find the intrinsic value of the securities of the company. The approach to fundamental analysis is often referred to as E-I-C Approach. The E-I-C denotes the three parts of the fundamental analysis. The three distinctive parts of fundamental analysis are: 1. Economic Analysis 2. Industry
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Suggested Questions for Arcadian Microarray 1. Prepare to explain the implications of case Exhibit 1 (Paige Simon’s first task). Based on that exhibit‚ is terminal value a material component of firm values? 2. Drawing on case Exhibit 4 and your own general knowledge‚ where would the various estimators be appropriate? Where would they be inappropriate? (Simon’s second task) 3. Regarding the cash flow forecasts in case Exhibit 5‚ at what point in the future would you set the forecast horizon for the
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SOLUTIONS Financial Management Seminar + Homework‚ Week 5 1. Starware Software was founded last year to develop software for gaming applications. Initially‚ the founder invested $800‚000 and received 8 million shares of stock. Starware now needs to raise a second round of capital‚ and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the investment is completed. a. How many shares must the venture capitalist
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lifestyle products 7 7. Comparison between Osim and its competitors 8 8. Osim Financials 8 8.1 Company’s Financial Ratios 8 8.2 Market Prospects 9 8.2.1 Osim on its own 9 8.2.2 Osim vs. Selected peers (VGO‚ Best World‚ Ogawa‚ Jacks) 9 8.2.3 Osim vs. STI 10 8.3 Projected Performance 10 9. Conclusion 11 Appendix A 12 Appendix B 16 Appendix C 19 Appendix D 24 Appendix E 25 Appendix F 26 1. Introduction to Osim International Osim International Ltd. (Osim) is a Singapore listed company;
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