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Blind Man's Buff: On the Search of the Optimal Capital Structure

Ignacio Velez-Pareja, Felipe Mejia-Pelaez, James W. Kolari - MASTER CONSULTORES - 2012

In these slides we discuss the practical and conceptual difficulty of finding an Optimal Capital Structure. We propose a normative approach we call Implicit Bankruptcy Costs Theory and how to proceed to find the optimal capital structure and value with period-to-period constant and variable...

Persistent link: https://www.econbiz.de/10010762910

Consistency in Chocolate. A Fresh Look at Copeland’s Hershey Foods & Co Case

Vélez-Pareja, Ignacio; Tham, Joseph - MASTER CONSULTORES - 2004

In cash flow valuation, on grounds of simplicity, it is common to assume that the leverage is constant over time. With … values are not constant. The Hershey case study in the popular book on valuation by Copeland et al. (1995) is a good … CFE. This paper is aimed to those who have learnt valuation with that edition (1995). …

Persistent link: https://www.econbiz.de/10010762922

EVA(c) Made Simple: Is it Possible?

Pareja, Ignacio Vélez; Tham, Joseph - MASTER CONSULTORES - 2004

Vélez-Pareja and Tham, 2003a, Vélez-Pareja and Tham, 2003b and Tham and Vélez-Pareja, 2004 showed the matching between discounted cash flow (DCF) methods and value added methods. They departed from the net operating profit less adjusted taxes NOPLAT and net income when using market values to...

Persistent link: https://www.econbiz.de/10010762967

The Correct Definition for the Cash Flows to Value a Firm (Free Cash Flow and Cash Flow to Equity)

Vélez-Pareja, Ignacio - MASTER CONSULTORES - 2004

cash flow and time value of money. In this note we specify very clearly what has to be included in those cash flows and the reasons why they should be included. The main issue is related to the inclusion or exclusion of some items in the working capital and the current practice to consider that...

Persistent link: https://www.econbiz.de/10010762970

Constant leverage modeling: A reply to "A tutorial to the Mckinsey model for valuation of companies"

Velez-Pareja, Ignacio; Tham, Joseph - MASTER CONSULTORES - 2008

In this note we analyze the tutorial based on the McKinsey methodology for valuing companies. We have found that the McKinsey methodology has one of the most common mistakes mentioned in Tham and Vélez-Pareja (2004a and b): valuing cash flows with a constant cost of capital when the leverage is...

Persistent link: https://www.econbiz.de/10010763009

Hershey Chocolate in Two Flavors: Kd and Ku

Vélez-Pareja, Ignacio; Tham, Joseph - MASTER CONSULTORES - 2004

consistency of our approach regarding the calculated values for equity. This paper is aimed to those who have learnt valuation …

Persistent link: https://www.econbiz.de/10010763016

A Practical Guide for Consistency in Valuation: Cash Flows, Terminal Value and Cost of Capital

Pareja, Ignacio Vélez; Pérez, Antonio Burbano - MASTER CONSULTORES - 2003

Practitioners and teachers very easily break some consistency rules when doing or teaching valuation of assets. In this …

Persistent link: https://www.econbiz.de/10010763033

Value Added to Invested Capital (VAIC): New Financial Performance Metric and Valuation Tool

Ibragimov, Rauf; Pareja, Ignacio Velez; Tham, Jospeh - MASTER CONSULTORES - 2012

advantage of computational simplicity and straightforward interpretation. Associated valuation model is equivalent to the … metrics in evaluating managerial performance. Equivalence of the VAIC valuation model to the fundamental approach of valuing a …-fledged investment valuation tool. …

Persistent link: https://www.econbiz.de/10010763041

Optimal Capital Structure for Finite Cash Flows

Pareja, Ignacio Vélez; Mejia-Pelaez, Felipe; Kolari, … - MASTER CONSULTORES - 2011

This paper shows how to proceed to find the optimal capital structure and value with period-to-period constant and variable leverage, when the discount rate for tax shields is Ke, the cost of levered equity. Numerical procedures and recursive closed-form non-circular expressions for the...

Persistent link: https://www.econbiz.de/10010763042

The tyranny of rounding errors: the mismatching of APV and the DCF in perpetuities in Brealey and Myers 6th and 7th edition of Principles of Corporate

Velez-Pareja, Ignacio; Tham, Joseph - MASTER CONSULTORES - 2007

In theory, different valuation methods, with consistent assumptions, must give identical results. Numerical examples … to show that rounding errors are not the reasons for the discrepancies.It is common to read that different valuation … valuation procedure for using the Discounted Cash Flow (DCF) method with the free cash flow (FCF) and the Adjusted Present Value …

Persistent link: https://www.econbiz.de/10010763052