The aim of the article is to present the method of establishing equity shares in weight average cost of capital (WACC), in which the value of loan capital results from the fixed assumptions accepted in the financial plan (for example a schedule of loan repayment) and own equity is evaluated by...

Presentation to the Singapore Shipping Association and at Nanyang Technological University. Basics of financial statements, what is valuation, valuation ratios, cash flow, asset-based, other issues and metrics

This article introduces a new financial metric for managerial performance evaluation, Value Added to Invested Capital (VAIC), with the cost of unlevered equity as a hurdle rate to calculate the capital charge rather than the widely accepted WACC. VAIC preserves all positive features of the...

Purpose: This study sought to explore the effect of capital management risk on value of the firm among private equity financial firms in Kenya. Design/methodology/approach: Anchored on the agency theory and guided by positivism research philosophy, descriptive research design as well as causal...

We use a survey approach to learn about valuation professionals' choices and implementations of valuation techniques in practice. The survey design allows us to control for a respondent's professional subgroup (e.g., consulting), education, experience, and valuation purpose characteristics. We...

We compare how bond market access affects firms' investment decisions in the United States and the euro area. Having a bond rating enables US corporations to invest more and undertake more acquisitions. In contrast, in the euro area, bond ratings have no effect on investment decisions....

We propose in this article an alternative approach to the Discounted Cash-Flow model based on the concept of economic capital developed by Merton and Perold (1993). We define what we call cash-flow@risk that consists in stripping future cash-flows, each cut into two parts, a low risk part...

Start-up firms typically produce negative cash flows in the first years after their foundation. As a consequence, standard discounted cash flow methods are not applicable, often forcing practioneers into using theoretically dissatisfying devices like multiples. In this paper, we develop a...

The DCF method or multiples are used to value companies in practice. Starting with the value additivity principle, the paper presents a general framework for DCF valuation. This framework allows defining stepwise and aggregated approaches to value risky cash flows and identifying inconsistent...

This paper analyzes the effect of corporate debt offerings on stock prices. Straight debt offerings have non-positive price effects, while convertible debt offerings have significantly negative effects. Public utility mortgage (non-convertible) bond offerings have marginally negative effects,...