Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

Step Output

Add the value of any assets

whoseearningsarenotpartof

operating income

+ Cash and marketable

securities

+ Value of minority

holdings in other

companies

+ Value of idle or

unutilized assets

Subtract nonequity claims on

the company

• Valueofinterest-bearing
  debt


• Presentvalueofoperating
  lease commitments


• Estimated value of
  minority interests in
  consolidated companies


• Unfunded healthcare or
  pension obligations


• Expected litigation
  payouts
  To get to value of equity = Value of equity

ILLUSTRATION 6.2: Valuing Titan Cement—March 2005

Titan Cement is a Greek cement company with a
well-establishedreputationforefficiencyandprofitability.To
valuethecompany,weusedafirmvaluationmodelandthe
following assumptions:

In2004,thefirmreported231.8millioneurosinoperating
income and aneffective taxrate of25.47%. Scaledto the
book value of capital at the end of 2003, this yields an
after-tax return on capital of 19.25%.