# Web2

In:

Submitted By cassumpcao
Words 10037
Pages 41
CHAPTER THREE

How Financial Statements are Used in Valuation

Stephen H. Penman

The web page for Chapter Three runs under the following headings:

What the Chapter is Doing

Historical Multiples

Historical Equity and Bond Returns

The Selection of Comparable Firms

Screening Engines

Calculating Multiples

Unlevered (or Enterprise) Multiples

Beware of Price-to-ebitda Ratios

P/E Ratios and Dividends

Price-to-sales Multiples During the Internet Bubble

Multiple Comparison Methods and Chain Letters

Asset-based valuation: Break Up Values

Firms Trading as Market Values less than Net Assets

No Arbitrage: the Law of One Price

How Share Prices are Arbitraged

Negative Stub Values

Expectational Arbitrage and the Risk of Arbitraging

The Cost of Arbitrage: Why There Might Appear to be an Arbitrage Opportunity When There is None.

Dealing with Risk in Active Investing

Appendix to Web Page: Formal Analysis of Abnormal Returns, No-arbitrage, and Market Efficiency

What this Chapter is Doing

Chapter 3 does three things:

First, it looks at three valuation and investment approaches that use financial statement information, but in limited, suspect or impractical ways, and points out the pitfalls in these methods:

o The Method of Comparables o Screening Analysis o Asset-Based Valuation

Second, it outlines the architecture of fundamental valuation approaches that employ all available information, and illustrates that architecture with the dividend discount model.

In this chapter, as in each chapter in the book, approach the material with the question: how do I get an edge? What are

### Similar Documents

Free Essay

#### Heat Project

...To find the tube-side heat transfer coefficients; Nu=hDοk=CRen Pr0.33 Re=DοVmaxρμ (Retrieved from: http://web2.clarkson.edu/projects/subramanian/ch302/notes/shelltube.pdf ) Assumption; Do=do=0.02m Di=di=34×0.02=0.015m (34"outer diameter is one of the common size used) l=Sn-Do or cl=Pt-Do Pitch (Sn@Pt) = 0.025m Clearance=0.025-0.02 =0.005m Sn=Sp In order to find Vmax, find the cross-flow area first; cross-flow area=shell IDDs ×baffle spacingB×clearance(cl)pitch (Sn) (Retrieved from;http://www.chemstations.com/content/documents/Technical_Articles/shell.pdf ) cross-flow area=(0.894m)(0.356m)0.0050.025 =0.0637m2 Vmax=Vscross-flow area (Retrieved from; http://web2.clarkson.edu/projects/subramanian/ch302/notes/shelltube.pdf ) To find Vs; Vs=msρ=27.80 (kgs)750.00 (kgm2)=0.0371 m3s Vmax=0.0371 (m3s)0.0637 (m2)=0.5819ms Ret=DoVmaxρμ =(0.02m)(0.5819 ms)(995.00kgm3)0.0008 kgm.s=14474.7625 Pr=Cpμk =(4.2×103 Jkg.K)(0.0008kgm.s)0.59 wm.K=5.6949 To find C:- SnDo=0.0250.02=1.25 From table (rectangular pitch-in-line tube); C=0.386 n=0.592 (Retrieved from; http://web2.clarkson.edu/projects/subramanian/ch302/notes/shelltube.pdf) Substitute all the value into; Nu=hDοk=CRen Pr0.33 h(0.02 m)0.59 wm.K=(0.386)(14474.7625)0.592(5.6949)0.33 ht=5872.21 wm2.K To find shell-heat transfer coefficient; Res=ρsUsDeμs=GsDeμs=msAs×Deμs ho=0.36ksDeRes0.55Prs0.33 for 2×103<Res=GsDeμ<1×106 (Retrieved from:...

Words: 604 - Pages: 3

Free Essay

#### University

...香港大学 网申链接 http://www.als.hku.hk/admission/tpg/welcome.htm 网申账号登录链接 https://sweb.hku.hk/tola/servlet/CreateUserScreen/loginForm 课程链接 http://www.als.hku.hk/admission/tpg/prospectus/2015/faculties_index.html 各个专业课程信息以及联系方式 http://www.als.hku.hk/admission/tpg/prospectus/2015/downloadable_application.html application fees:300hkd 专业： 工程学院 MSc in Computer Science 计算机科学 http://www.cs.hku.hk/msc/home/director_message.html MSc in Electronic Commerce and Internet Computing 电商 http://www.ecom-icom.hku.hk/home/welcome.asp MSc （Engineering） Building Services Engineering 屋宇设备工程／建筑设备工程 http://www.mech.hku.hk/bse/ MSc(Eng) in Environmental Engineering 环境工程 in Geotechnical Engineering 土木工程 in Infrastructure Project Management 基础设施项目管理 in Structural Engineering 结构工程 in Transportation Engineering 交通运输工程 http://www.als.hku.hk/admission/tpg/prospectus/2015/faculties_engineering_taught_mse_ee.html MSc(Eng) in Electrical and Electronic Engineering(Three Streams) EE 电子电气工程 http://www.eee.hku.hk/study/postgrad_overview.html MSc(Eng) in Energy Engineering 能源工程 http://www.eee.hku.hk/study/postgrad_overview.html MSc(Eng) in Industrial Engineering and Logistics Management 供应链物流管理 http://www.als.hku.hk/admission/tpg/prospectus/2015/faculties_engineering_taught_mse_ielm.html MSc in Mechanical Engineering 机械工程 http://www.mech.hku.hk 理学院 MSc in Environmental Management 环境管理 http://www.scifac.hku.hk/science/prospectives/pg/coursework/envmgt/index...

Words: 842 - Pages: 4

#### It190 Unit8 Essay Impact of It on Globalization

...of IT on Globalization B.W. Beck & K. Money IT190 Foundations in Information Technology Essay: Effects of IT on Globalization The first cited source, Age of Globalization, expresses the effects on globalization, with positive and negative regards to information technology1. Globalization has been revolutionary in history, integrating international world views, with products from manufacturing to cultural resources that promotes worldwide exchanges of ideas, economic impact and global interaction. The major factors which have contributed advances on an exponential scale include transportation in the air, sea, and ground, and the international infrastructure in telecommunications, from fiber optics, global thinking and the World Wide Web2. The processes in globalization has affected small business to large corporations, economics, social cultural resources, including politics from the migration of ideas with support and criticism from cultural differences intertwined with competition. The creativity and innovation from the diverse cultures has exploded into popularity that affect all civilization and lifestyles. Diverse knowledge and the ability to compete on a global scale has changed the way businesses and individuals interact. The advances in technology, with faster cell phone,smartphones, tablets integrated electronics, multi-CPU architect, faster bandwidth from fiber optic infrastructure will continue to integrate businesses and individuals in globalization for years...

Words: 421 - Pages: 2

#### Bulmers Ireland

...Bulmers Ireland “Time Dedicated to You” For this assignment we were asked to write an internal and external investigation for Bulmers Ireland. I would like to start by giving a brief history of the company itself. It started with an orchard in the town of Clonmel in Co. Tipperary. Commercial cider production began in 1935 under the control of local man William Magner. In 1960 they launched a “Champagne Perry” in direct competition with Showerings Ltd. product known as “Babysham”. Showerings took them to court over this and Bulmers lost, forcing them to sell up. It is currently a division of the C&C group, which is the largest drinks company in Ireland at the moment. Currently the company still operates in the Clonmel area in a plant a few miles outside the town called Annerville and employs around 470 people. Over the years the brand has grown from strength to strength and is now being sold in 30 countries across the world. With its flagship product still being the apple cider, it has tried to branch into other niche markets with in the alcoholic sector. Releasing Bulmers Light in 2007 and Bulmers pear/berry in 2010. (Web1) S.W.O.T. Analysis A swot analysis is a method used in business to determine the strengths your company possess, the weaknesses your company are subject to as well as the opportunities you could exploit and the threats you face. Strengths Strengths are an internal factor designed to show exactly where your power lies as a company...

Words: 2219 - Pages: 9

Free Essay

#### Internet of Things

...INTERNET OF THINGS Introduction: The next wave in the era of computing will be outside the realm of the traditional desktop. In the Internet of Things (IoT) paradigm, many of the objects that surround us will be on the network in one form or another. Radio Frequency IDentification (RFID) and sensor network technologies will rise to meet this new challenge, in which information and communication systems are invisibly embedded in the environment around us. This results in the generation of enormous amounts of data which have to be stored, processed and presented in a seamless, efficient, and easily interpretable form. This model will consist of services that are commodities and delivered in a manner similar to traditional commodities. Cloud computing can provide the virtual infrastructure for such utility computing which integrates monitoring devices, storage devices, analytics tools, visualization platforms and client delivery. The cost based model that Cloud computing offers will enable end-to-end service provisioning for businesses and users to access applications on demand from anywhere. Smart connectivity with existing networks and context-aware computation using network resources is an indispensable part of IoT. With the growing presence of WiFi and 4G-LTE wireless Internet access, the evolution towards ubiquitous information and communication networks is already evident. However, for the Internet of Things vision to successfully...

Words: 858 - Pages: 4

Free Essay

#### Article

...Different Learning Styles Lianet Hernandez Carlos Albizu University                 Different Learning Styles      Centuries ago the way students’ intelligence was assessed and judged was by their linguistic and logical mathematic intelligence. In 1983 Howard Gardner a professor of education at Harvard University changed this way of thinking among people. He developed multiple a intelligence theory stating that everyone learns differently and have different intelligence. Multiple intelligence gives adults a new perspective to look at their lives, because it provides opportunities to look for potential that was left behind in their early years of life, and which can be develop through programs. The majority of teachers have implemented activities that foster the different learning styles, but currently there are schools that depend on book-based teaching, and excessive repetition. As a result teachers label students as being smart or not by relying on just using one or two learnings style which may not be indicative of the student’s intelligence. (National Science Foundation, 2005)      By recognizing and understanding the different learning styles educators can better understand the techniques to use with different students. The learning styles have more influence than a person might realize. A person best learning styles might guide the way they learn. The different learning styles also change the way a person represents experiences, and the way they retain information. According...

Words: 949 - Pages: 4

Free Essay

#### Indigenous Australian Aboriginals

...The Dreaming The Dreaming is a term penned by famous anthropologist W.H. Stanner in 1956. (Fryer-Smith, 2002) It defines the conception of mystical spirits of the universe and encompasses everything within. This concept allows for explanations about the ‘Ancestral Beings’ and their travels, creating everything we see today. (Fryer-Smith, 2002) In customary principles, these ‘Ancestral Beings’ hold the power to arbitrate and guide the Aboriginal people’s lives. Indigenous Australians are the oldest inhabitants of the land with the most extensive practise of religion and customs, what we know as the Dreaming. (Edwards, 1998) The role and function of the Dreaming is to teach the Aboriginal people about the norms and mores of the sacred laws. Also known as customary law, these guidelines are an integral part of the Aboriginal culture as it maintains societal normalities. (ALRC, 1986) The Dreaming is a philosophy that binds every aspect of life together, it assists in knowing the past, present and future, and how to make conscious decisions to ensure the world continues triumphantly. According to Korff (2015) white man cannot comprehend the depth of the Dreaming, as it is more an analogy for providing identity and spiritualism to individuals. The diversity within the various communities explains how in-depth the spirituality is and how important this religion is to each Aboriginal person. Each tribe has their own definition and reason behind the Dreaming. The Ngarinyan kin...

Words: 2469 - Pages: 10

#### Koko

...Introduction The purpose of this report is to present different sources of finances to a business and the different implications of various finances in a business. It is divided into 6 parts. The first part will identify the sources of finance currently available to a business. The second part will assess the implications of the different source. The third part will evaluate appropriate sources of finance and analyze the costs of different sources of finance for the new solar power business project. The fourth parts will analyses the costs of different sources of finance for the new solar power business project. The fifth parts will explain the importance of financial planning. The sixth parts will assess the information needs of different decision makers. The seventh parts will explain the impact of finance may put out on the financial statements. 1. Identify the sources of finance available to a business. Liability is including bank loans, issuing bonds and notes payable, accounts payable, etc., and the latter mainly refers to the equity financing. Equity constitute liability, the enterprise to repay on schedule agreed by the principal and interest, the creditors generally don't participate in the enterprise the management decision, also does not have decision-making authority for the management of funds. Equity financing is to point to other investors to sell the company’s ownership, the equity of the owners to exchange funds. This...

Words: 2802 - Pages: 12

#### Sociology

...Clarissa Mills Investigate a Social Issue – Part 1 Professor Jonathan Loessin Introduction to Sociology 4/29/2012   Society has many different views on sexuality in today’s world. Human beings are “social animals”, and their habits, desires, hopes, fears, and beliefs are shaped by the various societies into which they are born. Society also sees this as the same with sexual attitudes and behaviors. People are born with a certain potential for sexual expression, but this potential can be realized in a many different ways. Human sexuality and language are also comparable on a general level and can be examined for their collective implications. In most societies the meaning of sex, same as the meaning of anything else is revealed by religion. This has always been the case in societies of the past, and even in the modern, secular societies the sexual standards often remain tied to the older religious doctrines. There has been no doubt that the sexual standards of our own society are still being influenced by the judeo- Christian heritage. In all societies the obvious biological difference in sexuality is also between men and women. This difference is used as a justification for forcing them into different social roles which limit and shape their attitudes and behavior. No society is content with the natural difference of sex, but each insists on adding to it a cultural difference of gender. In today society it is not enough for a man to be a male; he also has to appear...

Words: 1064 - Pages: 5

#### Demographics of Germany

...Angie Coomer MKT-568 Research Paper Socioeconomics Germany The purpose of this research paper is to provide socioeconomic information on Germany to help determine whether or not Germany is a good country to enter for Schmidt Brewing Company to expand their brewery operations. I will begin by providing some general history on Germany and then move to some specific demographics. I will then describe the current economic system of Germany and the level of economic freedom. I will conclude by explaining both the opportunities and threats that exist due to the current socioeconomic factors in Germany, and how these factors may affect operating a business. Last, I will elaborate on the beer consumption in Germany and how this information might affect the operating expansions of Schmidt Brewing if they chose to do business in Germany. Germany is a country located in Central Europe and is bordered by both the North Sea and the Baltic Sea. In the 16th century Germany was known as the center for Protestant Reformation. “The Protestant Reformation was a movement in Europe that began as an attempt to reform the Catholic Church.”(33). Germany became known as a nation state in 1871. “Traditionally, a nation state is a specific form of state, which exists to provide a sovereign territory for a particular nation, and which derives its legitimacy from that function.”(33). Following World War II, Germany divided into two separate states but then reunified again in 1990. Today, Germany...

Words: 1287 - Pages: 6

...arkinson's Disease: Is It All In the Brain? :: 6 Works Cited :: 6 Sources Cited Length: 1098 words (3.1 double-spaced pages) Rating: Red (FREE) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Parkinson's Disease: Is It All In the Brain? "When I should go lay down on the couch, but I know that I will never find a comfortable position, so if I'm to be uncomfortable, it may as well be here, in front of this gently glowing screen. I feel the last of last night's meds burn away in my throat and then the dreaded "heebie-jeebies" come" (6). Parkinson's disease otherwise named the "shaking palsy" in 1817 by James Parkinson affects 50,000 Americans every year. The risk of the disease is higher amongst men giving them twice risk of developing Parkinson's disease compared to women (5). It is not clear why men are more prone to getting the disease, but it may be related to them not having the female hormone estrogen. (5). The general population that is at risk for developing Parkinson's disease are people older than fifty (1,5).The disease is related to a motor system disorder that cause the patient's hands, legs, jaw, face, and arms to tremor. Parkinson's disease may also cause bradykinesia (slowness of movement) as well as a loss of balance, and a difficulty in doing ordinary daily activities such as walking, talking, eating, and writing (1,2,5). How does this disease then affect the I-Function? If we already have all of our learned capabilities...

Words: 1183 - Pages: 5

Free Essay

#### Developing a Healthy Child

...Developing a healthy child. 1. Nature versus Nurture: an ongoing debate describing the differences in child development. The prime question of this debate is whether genetic factors or environmental factors determine the development of a child. Nature or genetic factors refers to biological or hereditary genes imbedded in a child. Nature factor determines a child’s physical appearance like the eye color, hair color, height and other traits that are inherited. Nativists or a group of people who believe strongly in Nature, form an assumption that each individual is different due to his individual genetic code. Characteristics that are not observed at birth but which emerge later in life are formed due to maturation. On the contrary, environmental factors or Nurture refers to a child’s daily interactions with various people. The Nurture factor determines a child’s personality which he adapts due to his surroundings. Empiricists or people who are strong believers of Nurture, believe that a human mind at the time of birth is a blank slate or tabula rasa and is gradually formed due to environmental influences. They believe that psychological characteristics and behavioral differences that emerge through infancy and childhood are a result of learning. (Book) * A child’s reaction of a specific behavior and the influence of Nature-Nurture Anger, an emotion characterized by resentment toward someone or something you feel has deliberately done something wrong to you. Anger can...

Words: 1174 - Pages: 5

Free Essay

#### Other

...Definition of Race Race is a group of people of common ancestry, distinguished from others by physical characteristics, such as hair type, the color of eyes and skin. Race as a social construction is changing as time goes on. Our daily lives are affected by race whether we are aware of it or not. We can see all over the world that race has affected various domains of our lives. From the types of jobs we have the amount of money we make, the kinds of friends we keep, the food we eat and even the schools we will attend. The entire foundation of race is constructed on a platform based on the color of people’s skin. The construction of social reality is based on social groups and the agreements and disagreements that are made based on the acceptance of certain constructions when it comes to our existence. There is nothing biologically real about race. I have learned that that there is no certain identification of race that exists from our collective agreements, acceptance, and positions other than our existing with one another. Race is a social construction that has real consequences and effects. Race shapes the way we view ourselves and those around us. We shouldn’t have an objective knowledge about race. We can know what race is and how it works being aware that regardless of the various shifts in the meaning of race that they have occurred through history and going to occur geographically but this should not lead to skepticism and the destruction of positive social constructions...

Words: 1379 - Pages: 6