Financial Management Of Techtronic Industries Hong Kong Essay

For the purpose of calculating the net present value of the project, an appropriate cost of capital has to be calculated at which free cash flows of the project should be discounted. Since the project will be solely financed by selling new shares, cost of equity will be used as the discount rate. Beta for the company can be assumed to be equal to average of the betas of the competitors of the company. This average beta value comes out to be 1.2. Risk free rate is 0.17% while risk premium has been estimated to be 6%. Thus by putting these values in CAPM formula, we can find the cost of equity for the company which is 7.39%.

For instance, Book values might be realistic in mark-to-market accounting situations, where the firm has just started up, or where the firm consists substantially of working capital. On the other hand, Liquidation estimates would be more realistic in cases where the firm will indeed liquidate. Replacement values might indicate market values where the firm experiences high inflation. In any comparison to this, DCF and multiples give very direct estimates of market values. DCF will dominate where the firm has no earnings to capitalize or when assets consist mostly of intangibles that are not currently reflected in earnings.

The company aims to be a leading product in the industry, while satisfying customers experience through offering innovative products that use advanced technologies and services. The company also seeks to champion the use of clean technology with a bid to keep the environment clean. Moreover, it will engage talents and passions to come up with better

The company has launched a new line of products in a bid to improve its competitive edge in the retail industry. In addition, the new line of products aims at meeting the demands of customers at all levels. The new line of products includes products such as vegetables, deli services, kitchen essentials, designer clothes, and décor products. These products are targeted to a certain group of

The following paper is about a company that is at the top level of their industry in selling their products and services. The background of this company describes about what kind of company this is and the types of products and services it provides to their customers. This section also includes the recent performance of this company and the varying aspects of what their target customers and whose is the competition.

1. What specific items of capital should be included in the SIVMED’s WACC? Should before-tax or after-tax values be included? Should historical or new values be used? Why?

It is important to know the proper technique and method of valuing a company because different people may have different ways of assessing the value; it is also important in understanding the bank’s method of appraising and valuing a company or business

After that, we analyses the company’s financial performance through analyses the recent three years’ annual report from 2013 to 2015. Based the previous steps, we could conduct the evaluation of the company through many comprehensive indexes like WACC and two-stage discounted free cash flow model, we get the stock price by both FCFF and FCFE are $8.06 and $7.44 respectively , compare to the current price of 20 May 2016 is $10.36, and the price is overvalued.

It is focused on cash flow rather than accounting practices and allows for different components of a company to be valued separately. Conversely, the biggest challenge of the DCF method is that the determined value is only as accurate as the information it is given, that being the FCF, TV and discount rates. In other words, if the information given to determine the DCF isn’t accurate then the fair value for the investment won’t be accurate and the model won’t be helpful when assessing stock prices due to the inaccuracies. Furthermore, DCF is only good for long term values not short term investing. “The bottom line is that DCF is a rigorous valuation approach that can focus your mind on the right issues, help you see the risk and help you separate winning stocks from losers and help reduce uncertainty.” (McClure, 2011) So, now that we’ve looked at CAPM and DCF, what can we conclude?

       The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.

They also offer one of the biggest product ranges available for DIY projects, builders, renovations etc, in the one store facility, including:

For my DCF I assumed that the business will slow down to 2% growth in 2018 before picking up to 4% & 10% respectfully in 2019-2020. I assumed a terminal Perpetuity Growth Rate of 1% and a discount rate of 9%. I arrived at an Implied Fair Value of $74.12 a 25% upside.

Before we make the decision, we need to know the value of the Media General and the value of this offer. So we forecast the value of company by DCF model.

A discounted cash flow analysis measures the value of a company todays based on calculated predications of how much money they will make in the future. This valuation method is used to determine how profitable an investment is. To conduct a DCF analysis, I used future free cash flows predictions ranging from years 2016 through 2026 to get an estimated present value. My ultimate goal in conducting a discounted cash flow analysis for this project is to value to the equity of the stock and find the stock price for the Danaher Corporation.

The methods for valuing companies can be classified in six groups: MAIN VALUATION METHODS BALANCE INCOME MIXED CASH FLOW VALUE OPTIONS SHEET STATEMENT (GOODWILL) DISCOUNTING CREATION .Book value . Multiples Classic Equity cash flow EVA Black and .Adjusted .PER Union of Dividends Economic Scholes . Sales Free cash flow Investment value European profit .Liquidation .P/E EBITDA Accounting Capital cash flow Cash value option value .Other Experts APV added Expand .Substantial multiples Abbreviated CFROI the project value income Delay the others investment Alternative uses 2.1 Balance sheets – Based methods (shareholders’Equity) These methods seek to determine the company’s value by estimating the value of its assets. These are traditionally used methods that consider that a company’s value lies basically in its balance sheet. They determine the value from a static viewpoint, which, therefore, does not take into account the company’s possible future evolution or money’s temporary value. Neither do they take into account other factors that also affect the value such as: the industry’s current situation, human resources or organization problems, contracts, etc. that do not appear in the accounting statements. Some of these methods are the following: Book value, adjusted book value,