Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
Extraordinary, Recurring, and Unusual Items The rule for estimating both operating and net income is simple. The operating incom ...
istonormalizethembyaveragingtheexpensesacrosstime and reducing this year’s income by this amount. 4.Itemsthatrecureveryyearthatc ...
As we noted earlier in the chapter, technology companies haveusedanunusualploytogetthegoodwillcreatedwhena premiumispaidoverbook ...
firmsandthechoicewefacebetweenthetwoinvaluation. Thesecond issue arises usuallywith younger firms and is causedbythelargelossest ...
effective tax rates across firms. Figure 3.1 provides a distributionofeffectivetaxratesforfirmsintheUnitedStates in January2005. ...
firm’s effective taxrate be different from its marginaltax rate? There are at least four reasons: 1.Manyfirms,atleastintheUnited ...
Whena firm hasglobal operations, its income istaxed at differentratesindifferentlocales.Whenthisoccurs,whatis themarginaltaxrate ...
thetaxratesusedtocomputetheafter-taxcashflowscannot changeovertime.Thus,invaluingafirmwithaneffective taxrateof 24 percentinthec ...
taxrates—theeffectivetaxrateforever,themarginaltaxrate forever, and an approach that combines the two rates. APPROACH 1: Effecti ...
Thisvalueisbasedontheimplicitassumptionthatthefirm cannotdefertaxesfromthispointon.Infact,anevenmore conservativereading would s ...
cumulated deferred tax liability of $200 million, we can compute the deferred tax liability by the end of the fifth year: Weassu ...
afirmwithnetoperatinglossescarriedforward,thetaxrate usedforboththecomputationofafter-taxoperatingincome and costof capitalwillb ...
periodsonthetaxrateforSirius,thesatelliteradiopioneer. Siriusreportedrevenuesof$187millionandanoperatingloss of$790millionin 200 ...
Tax Benefits of R&D Expensing Earlierinthechapter,wearguedthatR&Dexpensesshould becapitalized.Ifwedecidetodoso,though,th ...
Inotherwords,thetaxbenefitfromR&Dexpensingallows us to add the difference between R&D expense and amortization directly ...
Thus,Ciscoderivesataxbenefitthatis$15millionhigher because it can expense rather than capitalize R&D. Completingtheanalysis, ...
This is anotherreason for shiftingto marginaltax rates in future periods. Ifwebasetheprojectionsonthereportedincome,we willover ...
valueofthefirm.Thequestion,ofcourse,ishowbesttobuild theeffectsintothecashflows.Perhapsthesimplestapproach istofirst valuethefir ...
bythegovernment.Inreturn,thegovernmentimposessugar pricecontrols.Thefirmcancomparethevaluecreatedbythe taxcreditwiththevaluelost ...
Lumpy Capital Expenditures and the Need for Smoothing Firmsseldomhavesmoothcapitalexpenditurestreams.Firms cangothrough periods ...
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