Equity Valuation Models参考.ppt

CHAPTER 19 Financial Statement Analysis Economic Value Added EVA is the difference between return on assets (ROA) and the opportunity cost of capital (k), multiplied by the capital invested in the firm. EVA is also called residual income If ROA k, value is added to the firm. * Example 19.4 Wal-Mart In 2009, Wal-Mart’s cost of capital was 5.9%. Its ROA was 9.6% and its capital base was $115 billion. Wal-Mart’s EVA = (0.096-0.059) x $115 billion = $4.25 billion * Accounting Differences Inventory Valuation Depreciation Inflation and Interest Expense Fair Value Accounting Quality of Earnings International Accounting Conventions Comparability Problems * International Accounting Differences Reserves – many other countries allow more flexibility in use of reserves Depreciation – US allows separate tax and reporting presentations Intangibles – treatment varies widely * Figure 19.2 Adjusted Versus Reported Price-Earnings Ratios * The Graham Technique Rules for stock selection: Purchase common stocks at less than their working-capital value. Give no weight to plant or other fixed assets. Deduct all liabilities in full from assets. * Figure 18.4 Earnings Growth for Two Companies Figure 18.6 P/E Ratios for Different Industries, 2007 Other Comparative Value Approaches Price-to-book ratio Price-to-cash-flow ratio Price-to-sales ratio Figure 18.7 Market Valuation Statistics Free Cash Flow Approach Value the firm by discounting free cash flow at WACC. Free cash flow to the firm, FCFF, equals: After tax EBIT Plus depreciation Minus capital expenditures Minus increase in net working capital Comparing the Valuation Models In practice Values from these models may differ Analysts are always forced to make simplifying assumptions The Aggregate Stock Market Explaining Past Behavior Forecasting the Stock Market Table 18.4 SP 500 Price Forecasts Under Various Scenarios * Financial statement analysis can be used to discover mispriced securities. Financial accounting data are widely av