The Portable MBA in Finance and Accounting, 3rd Edition

608 Making Key Strategic Decisions arrive at a proper value of ACME. This methodology determines the earn- ings of ACME without ...

Business Valuation 609 paying market rents to Bob, and she makes the corresponding adjustment to rent expense. As ref lected in ...

610 Making Key Strategic Decisions A common error in the income approach to valuation is improperly match- ing the income stream ...

Business Valuation 611 The dividend payout ratio (the amount of cash f lows actually distributed to shareholders; the remainder ...

612 Making Key Strategic Decisions ACME is estimated based on the net cash f lows in 2005 and then increasing them by the estima ...

Business Valuation 613 Required Discount Rate (Rate of Return) As previously discussed, since ACME is being analyzed on a debt-f ...

614 Making Key Strategic Decisions Investments in closely held businesses are widely considered to be long- term rather than sho ...

Business Valuation 615 Victoria tells Bob that the capital asset pricing model is widely used by analysts for investment managem ...

616 Making Key Strategic Decisions interest rate is less than 9%. Victoria determines that ACME is in the 40% in- come tax brack ...

Business Valuation 617 the first forecasted year (2001) is discounted one-half year, rather than one complete year, to the valua ...

618 Making Key Strategic Decisions as of December 31, 2000, on an as-if-freely-traded basis. Since this amount is based on rates ...

Business Valuation 619 Victoria’s analysis looks at the public companies’ balance sheets and in- come statements over several ye ...

620 EXHIBIT 18.12 ACME Manufacturing Inc.: Public ly Traded Guideline Co. method of valuation. ACME ($m illion) Median Market Va ...

Business Valuation 621 for fundamental differences between the selected public companies and the private business. Thus, if thes ...

622 Making Key Strategic Decisions value. This represents the discount an investor would require for buying shares in ACME inste ...

Business Valuation 623 until it is sold and the sales proceeds are received. We saw through the DCF model that the value of the ...

624 Making Key Strategic Decisions Have annual financial statements audited or reviewed by a certified pub- lic accountant and ...

Business Valuation 625 FOR FURTHER READING Desmond, G. and J. Marcell, Handbook of Small Business Valuation Formulas and Rules o ...

626 Glossary Accounting exposure:Increases or decreases in assets and liabilities resulting from exchange rate movements, which ...

Glossary 627 Asset (asset-based) approach: A general way of determining a value indication of a business, business ownership int ...