Explain method to analyze and to value seasonal businesses
Are there any methods to analyze and to value seasonal businesses?
Expert
Seasonal businesses can be valued through discounting flows using yearly data, but this needs some adjustments. The right way to value the flows is using the monthly data. Fernández (as 2003 and 2004) demonstrates that errors because of the utilization of annual data are significant. When using annual data, the computations of the value of the unlevered company and of the value of tax shields should be adjusted. Conversely, the debt we have to subtract in order to compute the value of the shares does not require any adjustment.
By using the average debt and the average of the working capital needs does not give a good approximation of the value of the company. Here not much emphasis on the impact of seasonality in company valuation as: Damodaran (1994), Myers and Brealey (2000), Penman (2001) and Copeland (2000) do not even comprise the terms “seasonal” or “seasonality” in their indexes.
Discuss how management’s discretion in applying accounting rules can mislead investors. Provide three examples and how the discretion can distort results?
Is book value the excellent proxy to the value of the shares?
Explain the term Indenture and also describe their provisions?
Why is Split useful?
Who were the creators of uncertain volatility model?
Does financial leverage (i.e. debt) have any influence on the Free Cash Flow, upon the Cash Flow to Shareholders, upon the growth of the company and upon the value of the shares?
Eric Rowan is planning to buy a house for $155,000 by borrowing money at the rate of 9%. He expects to rent the house for 5 years, collecting $20,000 annual rent in advance each year. He thinks that he can sell the house for $175,000 after five years. Fulton has incom
What is the importance and the utility of the given formula: Ke = DIV(1+g)/P + g?
Is the relation in between book value of shares or capitalization a good guide to investments?
You are an analyst in the financial division of Flipper Industries (FI) which has a beta of 1.80 (you are risk-philic, so you enjoy the thrill of working somewhere so risky). The company just paid a dividend of $1 and dividends are expected to grow at 5% per year. The
18,76,764
1957775 Asked
3,689
Active Tutors
1419218
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!