1. Valuation of Virginia’s assets a. Present value: PV = $2‚000‚000 + $3‚000‚000/(1+0.06)1 = $2‚000‚000 + $2‚830‚189 = $4‚830‚189 b. Future Value (1 year): FV = 2‚000‚000(1+0.06)1 + 3‚000‚000 = 2‚120‚000 + 3‚000‚000 = 5‚120‚000 2. Valuation of Viginia’s assets with investment c. $1 million investment PV = $1‚800‚000/(1+0.06)1 + $3‚000‚000 = $1‚698‚113 + $3‚000‚000 = $4‚698‚113 d. $2 million investment
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Analysis and Valuation of Insurance Companies Industry Study Number Two Center for Excellence in Accounting and Security Analysis Columbia Business School established the Center for Excellence in Accounting and Security Analysis (CEASA) in 2003 under the direction of Professors Trevor Harris and Stephen Penman. The center aims to be a leading voice for independent‚ practical solutions for financial reporting and security analysis‚ promoting financial reporting that reflects economic reality
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Ratio analysis – Shinepukur Ceramics Versus RAK Ceramics Current ratio Shinepukur: From 2009 to 2010‚ current ratio of Shinepukur has increased by 0.24 because of increase in total current assets and decrease in total current liabilities. The increase in total current has occurred for increase in accounts-and-other-receivables‚ advances-deposits-and-prepayments and cash. Among these elements‚ the increase in advances-deposits-and-prepayments is significant (from 82182270 to 278773841). On the
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for Walgreens was 14 percent (a good rate for a retailer). To be fair‚ if all companies in an industry earned the same ROIC‚ then earnings growth would be the differentiating metric. For reasons of simplicity‚ analysts and academics have sometimes made this assumption‚ but as Chapter 4 will demonstrate‚ returns on invested capital can vary considerably‚ even between companies within the same industry. Question 2 Value Inc. generates higher cash flows because it doesn’t have to invest as much
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FINANCIAL STATEMENTS Accrual-based approach – revenues are recorded at the point of sale and costs when they are incurred‚ not necessarily when a firm receives or pays out cash Cash flow approach – used by financial professionals to focus attention on current and prospective inflows and outflows of cash 1. Balance sheet a. Assets Cash and Cash Equivalents Marketable securities Accounts receivable Inventories Net property‚ plant and equipment Intangible assets b. Liabilities Accounts
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LECTURE 8 STOCK VALUATION CLASS QUESTION 8 1. Dividend yield example: If two companies both pay annual dividends of $1 per share‚ but ABC company’s stock is trading at $20 while XYZ company’s stock is trading at $40. In which company would an investor prefer to investment based on its dividend yield? 2. If the stock market is semi-strong efficient‚ which of the following statements is correct? a. All stocks should have the same expected returns; however‚ they may have different realized returns
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Important Financial Ratios in Investment Analysis Introduction Financial ratios are derived ratio numbers from the financial statements of a company. Depending on the task‚ financial ratios can serve to various purposes in accounting‚ legal‚ M&A uses‚ etc. For investors‚ financial ratios are very powerful in two ways: indentifying the company’s unique competitiveness and evaluating its stock price level. The first part helps investor find a truly valuable company and the second part helps investor
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Ratio Analysis Memo Profitability: Asset turnover and Profit Margin What do the profitability ratios reveal about the financial position of the company? Which users may be interested in each type of ratio? What does the collected data reveal about the performance and position of the company? The profitability ratios measure a company’s operating success for a specific period of time. Most investors and bankers are going to be interested in the profitability of a company. The data for asset
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Running Header: JetBlue Airways IPO Valuation JetBlue Airways IPO Valuation Borislav Belenov‚ Wade Brashear‚ Jamie Clausen‚ Paul Collier‚ Nicole Hagan and Melissa Lein Managerial Finance Chadron State College Professor Steve Stoner May 2009 David Neeleman is the founder of JetBlue Airways‚ which began under the name of “New Air” in 1999. Many JetBlue executives were previously employed by Southwest Airlines‚ a competitor in the area of low cost travel. However‚ Mr. Neeleman’s vision was
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reports. The six ratios considered are current ratio‚ quick ratio‚ profit margin‚ operating ratio‚ debt-equity ratio‚ and debt-asset ratio. These ratios were compared over time‚ against its close competitors‚ which are Amazon.com Inc. and Wal-Mart Stores Inc.‚ and against a calculated industry benchmark. Based on our findings‚ we conclude that Indigo is financially healthy. For example‚ current and quick ratios are both higher than its competitors and its industry benchmark. Operating ratio indicated that
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