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The Informational Role and Value Relevance of Earnings, Cash Flows, and Accruals

Ashton, David J. - 2016

In this paper, we establish a theoretical relationship between earnings components and future stock returns. It shows the informational role of earnings, cash flows and accruals in predicting future stock returns and the key role played by the earnings response coefficient. It also suggests that...

Persistent link: https://www.econbiz.de/10012987940

Estimating Sustainable Normalized Operating Free Cash Flow

Cooper, Ian A. - 2016

This note discusses the choices involved in estimating sustainable normalized operating free cash flow, which is the single most important driver of enterprise value. Being able to make a well-justified estimate of sustainable free cash flow is a basic skill in enterprise valuation. Heinz in...

Persistent link: https://www.econbiz.de/10012988392

Do Analysts’ Cash Flow Forecasts Improve the Accuracy of Their Target Prices?

Hashim, Noor - 2016

Current evidence on the sophistication of analysts' cash flow forecasts is ambiguous. For example, Call et al. (2009) show that issuing cash flow forecasts has important benefits for analysts' earnings forecasts, while Givoly et al. (2009) question the validity of this result, arguing that...

Persistent link: https://www.econbiz.de/10012988560

Do Analysts’ Cash Flow Forecasts Improve the Accuracy of Their Target Prices?

Hashim, Noor - 2016

Persistent link: https://www.econbiz.de/10012988890

Can Cash-Flow Beta Explain the Value Premium?

Zhou, Bo - 2018

minus overvalued) but is not significant in cheap junk minus expensive quality stocks. If cash-flow beta is the source of … the value premium, we would expect a larger cash-flow beta difference between the cheap quality and expensive junk … that the cash flow beta may only spuriously explain the value premium. Or, at least, the cash-flow risk premium estimated …

Persistent link: https://www.econbiz.de/10012911648

Time Variation in Cash Flows and Discount Rates

Cenesizoglu, Tolga - 2019

The relative contributions of cash flow and discount rate news to the conditional variance of market returns exhibit significant variation over time. We identify lagged changes in PPI inflation as the main macroeconomic determinant of this time variation. Cash flow betas of value stocks increase...

Persistent link: https://www.econbiz.de/10012902077

Net Cash Flow Yield and the Cross-Section of Stock Returns

Dai, Yiqing - 2019

Fama and French (2006) decompose the valuation equation into the book to market ratio (BM), profitability and investment to estimate expected returns. In this paper, I attempt to integrate information from the valuation equation into one variable, net cash flow yield (NCFY), to capture expected...

Persistent link: https://www.econbiz.de/10012903101

Net Income, Cash Flows, Reduced Balance Sheet and WCR (Working Capital Requirements)

Fernandez, Pablo - 2019

The net income of a company in a given year is an arbitrary number which depends on several decisions on the accounting of expenses and revenues. By contrast, each cash flow (money going out of the cash of the company into someone's pocket: shareholders, debt owners...) is a single number not...

Persistent link: https://www.econbiz.de/10012903900

Valuing Companies by Cash Flow Discounting : Fundamental Relationships and Unnecessary Complications

Fernandez, Pablo - 2019

Company valuation using discounted cash flows is based on the valuation of the Government bonds: it consists of applying the procedure used to value the Government bonds to the debt and shares of a company. This is easy to understand (sections 1, 2 and 3). But company valuation is complicated by...

Persistent link: https://www.econbiz.de/10012905582

WACC : Definition, Misconceptions and Errors

Fernández, Pablo - 2019

The WACC is just the rate at which the Free Cash Flows must be discounted to obtain the same result as in the valuation using Equity Cash Flows discounted at the required return to equity (Ke).The WACC is neither a cost nor a required return: it is a weighted average of a cost and a required...

Persistent link: https://www.econbiz.de/10012906072