Purpose – The purpose of this paper is to investigate the approaches to calculate measures of value creation incorporating capital charge, to reveal inconsistencies in combining market and book values in a single measure and to suggest necessary corrections.Design/methodology/approach – The...

For investing in profitable ventures, the firms intend to recover the investment made in them. Thus, the determination of the respective cost of capital of a venture can provide a base for making decisions on whether to accept the project profitably. In this context, this paper provides some...

The cash flow estimation is important to evaluate projects in view of adding values to the owners’ equity of a firm. Cash flow estimation is a primary requirement for capital budgeting and using project evaluation techniques. Hence, this paper provides cash flow estimation methods from an...

As the objective of the capital budgeting is to add values to the wealth of an owner of a business, the capital budgeting primarily insists the recovery of investments made in the projects. To improve the owner’s wealth, it is important to evaluate and identify profitable projects using some...

In this teaching note I list some suggestions that might be useful to take into account when forecasting financial statements departing from historical data. The ideas presented in this note are the result of advising undergraduate and graduate students in the course Econ 195.96/295.96...

When creating a firm or when we intend to value an ongoing concern it is very important to have reliable and consistent financial statements in order to make the proper decisions not only for the starting of a new firm but for the following up and monitoring that firm or simply an ongoing...

Spanish Abstract: En esta nota pedagoacute;gica presento algunas sugerencias e ideas que puede ser uacute;til tener en cuenta cuando se trata de pronosticar estados financieros a partir de datos histoacute;ricos. Las ideas que se presentan son el resultado de la experiencia de aconsejar a los...

In addition to other contributions to the literature, this note shows how value created can be measured if firms are financed not only by equity, but also by debt. We deal with this capital structure using the weighted average cost of capital (WACC) approach. We show that measuring value...