Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
toequitythatcouldhavebeenpaidtostockholders.InJune 2000, for instance, the following table reports Microsoft’s holdings of near- ...
ever-increasingprofitsontheonehandandhighstockreturns ontheother.Wewouldaddthecashbalanceatfacevalueto the value of Microsoft’s ...
valuation.Thealternativeistovalueeachoftheequitiesthat thefirmhas investedin, butthis willbecome increasingly cumbersomeasthenum ...
themarketvalueofthesharesinaclosed-endfundisgreater orlessthanthemarketvalueofthesecuritiesownedbythe fund.Forthesefirms,itisapp ...
continueinperpetuityandearn2%lessthanthereturnonthe market index also in perpetuity. Ona percent basis,the discountrepresents16. ...
Ifthesecuritiesorassetsownedinanotherfirmrepresentless than 20 percent of the overall ownership of that firm, an investmentistre ...
thebulkoftheseassetsatmarketlevelseachperiod.Thisis called marking to market and provides one of the few instances in which mark ...
twofirms,wheretheassetsandliabilitiesofthetwofirmsare mergedandpresentedasonebalancesheet.Theshareofthe firmthatisownedbyotherin ...
youdoanyoftheabove.Ifyoudonotdoso,youwilldouble count the value of the subsidiary. Why,youmightask,dowenotvaluetheconsolidatedfi ...
Step1:Ifthecompanyhasanymajoritycrossholdings,use thefinancial statementsthat isolate theparent companyto valuetheparentcompany. ...
32 Inaddition,Segoviaowns15%ofLatinWorks,arecord andCDcompany.Theseholdingshavebeencategorized as minority passive investments, ...
2.Value the 51% of equity in Seville Enterprises: 3.Value of the 15% stake in LatinWorks: ...
Toprovideacontrast,considerwhatwouldhavehappenedif wehadusedtheconsolidatedincomestatementandSegovia’s costofcapitalto dothisval ...
NotethattheminorityinterestsinSevillearecomputedtobe 49% of the book value of equity at Seville. TheminorityinterestsinLatinWork ...
EnvironmentAsafirm’s holdingsbecome morenumerous, estimating the values of individual holdings will become moreonerous.In fact,t ...
holdings would be $500 million. In fact, this approachcanbegeneralizedtoestimatethevalueof complexholdingswhereyoulacktheinforma ...
33 Thoughtheearningsmultipleswillbeconsistent, with both themarket value ofequity and earnings includingtheportionofthesubsidiar ...
forthisfirm.Figure10.7showshoweachinputinto the multiple will be affected by the consolidation. FIGURE 10.7 Consolidated Holding ...
Thiscanthenbecomparedtoothercompaniesthataresimilar to the parent company. OTHER NONOPERATING ASSETS Firmscanhaveothernonoperati ...
Howdoyoureflectthevalueofsuchassetsinfirmvalue?An inventory of allsuch assets (or atleast the most valuable ones)isafirststep,fo ...
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