--%>
Assignment Help - homework help

Explain method to analyze and to value seasonal businesses

Are there any methods to analyze and to value seasonal businesses?

E

Expert

Verified

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.

   Related Questions in Corporate Finance

  • Q : Discounting Free Cash Flow or

    Which of these two ways is better: discounting the Free Cash Flow or discounting the Equity Cash Flow?

    		•
  • Q : Broad research methodologies Various

    Various broad research methodologies are available with which to study the development of accounting theory. a. Discuss the deductive, inductive, normative, and empirical research methods.  

  • Q : Explain modern quantitative

    Explain modern quantitative methodology for portfolio selection.

    		•
  • Q : Is ROE a correct measurement of return

    The ROE is the ratio among net income and Shareholders’ equity. The meaning of Return on Equity is return to shareholders. Therefore, is ROE a correct measurement of the return to shareholders?

    		•
  • Q : Explain useful properties of

    Explain useful properties of low-discrepancy sequence theory or quasi random number theory.

    		•
  • Q : Which method must use to valuate young

    Which method must we use to valuate young companies along with high growth but uncertain futures? Two illustrations were Boston Chicken and Telepizza while they began.

    		•
  • Q : How companies accuse investors make

    Sometimes, companies accuse investors of performing credit sales which they make their quotations fall. Is it true?

    		•
  • Q : An example of use beta of Kinepolis in

    A financial consultant is valuing the company I set as an objective (an entertainment centre) by discounting the cash flows until the end of the dealership at 7.26% (interest rate on 30-year-bonds = 5.1%; market premium = 5%, and Beta = 0.47%). 0.47 is a beta provided

    		•
  • Q : Operational efficiency and

    Distinguish between Operational efficiency and informational efficiency?

    		•
  • Q : Continuously compounded rate of return

    Solve for the stated annual rate, r equal to the continuously compounded rate of return implicit in turning $1 at the end of 1925 (beginning of 1926) into these reported valued from RWJ9 in 2008 Figure below: 1. Determine the state

    		•