Altman's Z-score is introduced in an Excel framework to produce a quick calculation of the Z-score with actual financial data available through the Internet. The lesson plan developed is easily introduced with topics concerning ratio analysis, financial risk, bond rating changes, and bankruptcy....

Sensitivity analysis is a very common exercise performed with the forecasting of project cash flows. In this paper, a duration-type measure is generated that provides a single number for the assessment of the project cash flows relative to changes in the discount rate (or adjusted for changes in...

We value a real option (a lease) using an implied binomial tree (IBT). IBTs use information embedded in the prices of traded options to calibrate a pricing tree for valuing other options on the same underlying asset. By doing so, IBTs capture excess skewness and kurtosis in the underlying asset...

We show that a careful net present value (NPV) using risk-adjusted discount rates produces a real option valuation identical to that obtained from a risk-neutral option valuation. This general result demonstrates that NPV and risk-neutral option valuation are equivalent. Although equivalent, we...

A firm value calculator (FVC) is introduced that is much faster than its pro forma counter-part. The additional benefit of this FVC over what is available in the existing literature is a direct analysis of the effect of leverage. The debt analysis is captured within both the firm's cash flow and...

We show how to implement a Rubinstein (1994) implied binomial tree using an Excel spreadsheet, but without having to use visual basic in Excel (VBA). We demonstrate both the optimization needed to generate implied ending risk-neutral probabilities from a set of actual option prices and the...

We present a real option valuation using the weighted average cost of capital (WACC). This is an alternative to risk-neutral real option valuation. Using the WACC involves a marginal increase in mathematical complexity, but it is easy to implement in a spreadsheet, and it is easy to present to...

Headlines from featured stories in Business Week, Fortune, and Forbes were collected for a 20-year period to determine whether positive stories are associated with superior future performance and negative stories are associated with inferior future performance for the featured company....

Two-asset portfolio mathematics is a fixture in many introductory finance and investment courses. However, the actual development of the efficient frontier and capital market line are generally left to a heuristic discussion with diagrams. In this article, the mathematics for calculating these...

Which journal articles have the most impact on finance research? Which journals dominate finance research in the 1990s? We answer these and similar questions using a comprehensive sample of journals, an extensive time period, and a new ranking method that avoids problems inherent in the existing...