Chapter 10: Analysis and Valuation of Privately Held Companies Answers to End of Chapter Discussion Questions 10.1 What is the capitalization rate and how does it relate to the discount rate? Answer: The terms discount rate and capitalization rate are often used interchangeably. Whenever the growth rate of a firm’s cash flows is projected to vary over time‚ the term discount rate generally refers to the factor used to convert the projected cash flows to present values. In contrast‚ if the cash
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plans would require $4 billion in capital in addition to $2 billion in excess cash that the firm had built up. Sara’s immediate task was to brief the board on options for raising the needed $4 billion. Unlike most companies its size‚ Merit had maintained its status as a private company‚ financing its growth by reinvesting profits and‚ when necessary‚ borrowing from banks. Whether Merit could follow that same strategy to raise the $4 billion necessary to expand at the pace envisioned by the firm’s
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Auditors were not always independent and corporate government procedures and disclosure provisions were inadequate. Sometimes‚ executive compensation was tied to the stock of the company which created an incentive to manipulate the stock price by using fraudulent accounting practices to make it look like companies were making more money than they actually were. The Sarbanes-Oxley Act of 2002 was introduced because of the collapse of several major corporations due to these practices. This paper
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issue now is whether or not foreigners can own more than 40% of a media company. This is a country that has also experienced dominance of state-owned media under martial law and during that time‚ and Filipinos did not accept that sitting down but they fought hard for press freedom. Now‚ with the balance of privately owned and state-owned media companies‚ credibility is now being questioned for some private newspaper companies with owners that are also taking part in other business ventures‚ and the
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privately held companies. The act contains 11 titles‚ or sections‚ ranging from additional corporate board responsibilities to criminal penalties‚ and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Out of Sarbanes-Oxley the Public Company Accounting Oversight Board‚ or PCAOB was created and is charged with overseeing‚ regulating‚ inspecting and disciplining accounting firms in their roles as auditors of public companies. The act also
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government and the private industry. The above picture is two of Americas largest private prison companies. CCA and Geo (Cornell is now owned by GEO) profit billions of dollars every year to build and house prisoners for the government. Money: One pro that the private corrections industry has over public community corrections is that they can do it better and for less money. Private correction companies are able to save money several different ways. One of these ways is by paying their staff members
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* Meaning * 3 Ps of disinvestment | 4-5 | PSU * Meaning | 6 | Reasons for Disinvestment * Inefficiencies * Negative Rate of Return | 7 | Objectives of Disinvestment * To reduce the financial burden on government * To improve public finances * To introduce competition and market discipline * To find growth | 8 | Importance of Disinvestment * Utilisation of funds for: * Financing the increasing fiscal deficit * Financing large-scale infrastructure development * For
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affordable cost to the company. An IPO – an acronym for Initial Public Offer – is one of the most popular methods of raising money from the general public and investors. IPO DEFINITION An initial public offer‚ as the name indicates‚ is the first (initial) instance of a company (called the issuer) offering its commons stock (or shares) to the general public for subscription. It is a common misconception that only newly formed companies resort to raising
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THE ECONOMIC SYSTEM IN EGYPT PRIVATE SECTOR: Ready for action As Egypt is known for it’s mixed economic system ‚Compared with other emerging markets‚ Egypt’s private sector is tiny. The public sector still accounts for almost 70 per cent of GDP despite the fact that hundreds of public enterprises have been wholly or partly privatised during the past four years. Judging‚ however‚ by the rapid growth of some of the country’s largest family-owned businesses‚ this is unlikely to hold true five
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Winding Up of Company The winding up is the process of putting an end to the life of the company. And during this process‚ the assets of the company are disposed of‚ the debts of the company are paid off out of the realized assets and if any surplus is left‚ it is distributed among the members in proportion to their shareholding in the company Q.1 WHAT ARE THE POWERS OF LIQUIDATOR LIQUIDATOR A person appointed to carry out the winding up of a company is called liquidator. If the winding
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