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Author: David A. Holland Publisher: John Wiley & Sons ISBN: 1119440483 Category : Business & Economics Languages : en Pages : 421
Book Description
Beyond Earnings is targeted at investors, financial professionals, and students who want to improve their ability to analyze financial statements, forecast cash flows, and ultimately value a company. The authors demonstrate that reported earnings are easily gamed by accounting shenanigans and reveal how commonly used profitability measures such as return on equity can be misleading. Because earnings and P/E ratios are too unreliable for valuation, this book takes you beyond earnings and shows you how to apply the HOLT CFROI and Economic Profit framework in a step-by-step manner. A better measure of profitability results in improved capital allocation decisions and fundamental valuations. This ground-breaking book offers the first practical in-depth discussion of how profitability and growth fade, and shows how to put this information to work right away. The authors introduce their trailblazing Fundamental Pricing Model which includes fade as an adjustable value driver and can be used to value the impact of business model disruption. As the authors explain, the key to superior stock picking is understanding the expectations embedded in a stock’s price and having a clear view of whether the company can beat those expectations. The HOLT framework has been rigorously field tested for over 40 years by global investment professionals to help them make better stock picks and by corporate managers to understand the expectations embedded in their stock price. Beyond Earnings is an indispensable guide for investors who want to improve their odds of outperforming the competition.
Author: David A. Holland Publisher: John Wiley & Sons ISBN: 1119440483 Category : Business & Economics Languages : en Pages : 421
Book Description
Beyond Earnings is targeted at investors, financial professionals, and students who want to improve their ability to analyze financial statements, forecast cash flows, and ultimately value a company. The authors demonstrate that reported earnings are easily gamed by accounting shenanigans and reveal how commonly used profitability measures such as return on equity can be misleading. Because earnings and P/E ratios are too unreliable for valuation, this book takes you beyond earnings and shows you how to apply the HOLT CFROI and Economic Profit framework in a step-by-step manner. A better measure of profitability results in improved capital allocation decisions and fundamental valuations. This ground-breaking book offers the first practical in-depth discussion of how profitability and growth fade, and shows how to put this information to work right away. The authors introduce their trailblazing Fundamental Pricing Model which includes fade as an adjustable value driver and can be used to value the impact of business model disruption. As the authors explain, the key to superior stock picking is understanding the expectations embedded in a stock’s price and having a clear view of whether the company can beat those expectations. The HOLT framework has been rigorously field tested for over 40 years by global investment professionals to help them make better stock picks and by corporate managers to understand the expectations embedded in their stock price. Beyond Earnings is an indispensable guide for investors who want to improve their odds of outperforming the competition.
Author: Peta Stevenson-Clarke Publisher: ISBN: Category : Languages : en Pages :
Book Description
The relation between stock returns, earnings and cashflows is of importance because it directly addresses the issue of whether accounting data provide value relevant information. The empirical evidence to date, however, has documented low explanatory power for earnings and inconclusive incremental information content for cashflows. This research re-evaluates the incremental information content debate using Australian data. Our research is motivated by: recent innovations in research design, including the specification of nonlinear functional relations between accounting variables and prices, and the fact that differences in firm size characteristics may influence the relative information content of the accounting variables. We observe that: (i) a nonlinear functional relation provides greater explanatory power for both earnings and cash flows; (ii) the results are consistent with more transitory earnings components for smaller firms; and (iii) contrary to received theory, cashflows add greater incremental explanatory power for large firms.
Author: AICPA Publisher: John Wiley & Sons ISBN: 1945498870 Category : Business & Economics Languages : en Pages : 800
Book Description
Updated for new accounting and auditing guidance issued, this valuable tool provides hundreds of high quality disclosure examples from carefully selected U.S. companies of different sizes, across industries such as banking, credit and insurance, communication services, and healthcare from such organizations as Scotts Miracle-Gro, Coca-Cola, Caterpillar, and BB&T. Illustrations of the most important, immediate, and challenging disclosures, such as derivatives and hedging, consolidations, and fair value measurement are provided. Hot topics include statement of cash flows, going concern, and business combinations and intangibles. This edition also provides clear, direct guidance to help you understand and comply with all significant reporting requirements and detailed indexes to help you quickly find exactly what you need.
Author: Aswath Damodaran Publisher: John Wiley & Sons ISBN: 0470049375 Category : Business & Economics Languages : en Pages : 698
Book Description
"Aswath Damodaran is simply the best valuation teacher around. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. You can bet that I do." -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management and author of More Than You Know: Finding Financial Wisdom in Unconventional Places In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today?s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You'll gain an understanding of the vitality of today?s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.
Author: David T. Larrabee Publisher: John Wiley & Sons ISBN: 1118417607 Category : Business & Economics Languages : en Pages : 628
Book Description
Analysis and insights from top thought leaders on a pivotal topic in investing and asset management Valuation is the cornerstone for investment analysis, and a thorough understanding and correct application of valuation methodologies are critical for long-term investing success. Edited by two leading valuation experts from CFA Institute, this book brings together the insights and expertise of some of the most astute and successful investment minds of the past 50 years. From Benjamin Graham, the “father of value investing,” to Aswath Damodaran, you’ll learn what these investment luminaries have to say about investment valuation techniques, including earnings and cash flow analysis. Features the best thinking on valuation from the industry’s masters on the topic, supplemented with dozens of fascinating and instructive real-world examples Comprehensively discusses special valuation situations, such as real options, employee stock options, highly leveraged firms, corporate takeovers, and more Supplies you with the tools you need to successfully navigate and thrive in the ever-changing financial markets Is being produced with the full support and input of CFA Institute, the world’s leading association of investment professionals
Author: Aswath Damodaran Publisher: Now Publishers Inc ISBN: 1601980140 Category : Business & Economics Languages : en Pages : 102
Book Description
Valuation lies at the heart of much of what we do in finance, whether it is the study of market efficiency and questions about corporate governance or the comparison of different investment decision rules in capital budgeting. In this paper, we consider the theory and evidence on valuation approaches. We begin by surveying the literature on discounted cash flow valuation models, ranging from the first mentions of the dividend discount model to value stocks to the use of excess return models in more recent years. In the second part of the paper, we examine relative valuation models and, in particular, the use of multiples and comparables in valuation and evaluate whether relative valuation models yield more or less precise estimates of value than discounted cash flow models. In the final part of the paper, we set the stage for further research in valuation by noting the estimation challenges we face as companies globalize and become exposed to risk in multiple countries.
Author: George T. Friedlob Publisher: John Wiley & Sons ISBN: 9780471103813 Category : Business & Economics Languages : en Pages : 260
Book Description
Understanding Return on Investment clarifies and explains all the fundamental elements of this important financial tool, making it one you can use comfortably and successfully.
Author: Stephen R. Foerster Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
Although various income statement-based measures predict the cross section of stock returns, direct method cash flow measures have even stronger predictive power. We transform indirect method cash flow statements into disaggregated and more direct estimates of cash flows from operations and other sources and form portfolios on the basis of these measures. Stocks in the highest-cash-flow decile outperform those in the lowest by over 10% annually (risk adjusted). Our results are robust to investment horizons and across risk factors and sector controls. We also show that, in addition to operating cash flow information, cash taxes and capital expenditures provide incremental predictive power.
Author: Kirsten Lynn Anderson Publisher: ISBN: Category : Languages : en Pages : 162
Book Description
Abstract: This study analyzes the relations between returns and earnings and returns and cash flows. The purpose is to determine how accounting information is associated with firm performance (market returns). These relations are studied over both short (one and five years) and long (ten years) measurement intervals. Models with varying degrees of distributional restrictions are employed to determine the nature of these relations over each interval. These are OLS, arctan (nonlinear), and a semiparametric (single index) model. Within each measurement interval, firms are partitioned into quartiles based on the length of the firm's operating cycle. The operating cycle measures how long it takes a firm to convert cash outflows to cash inflows from operations. It also measures the approximate length of time that it takes for changes in operations to result in changes in firm profitability. Nonlinearities likely occur in the returns-earnings relation in part because of the timing of recognition differences in the accrual system. Information is likely recognized by the market before it is in accounting. This differential in recognition results in different valuation coefficients on different components of accounting earnings. Certain components of earnings may have already been recognized by the market so a lower coefficient results. It is likely that extreme earnings contain a higher proportion of these types of components so nonlinearities result in the tails of the earnings distribution. Since changes in operations for firms with shorter operating cycles likely impact the firm's profitability more quickly, I expect the returns-earnings relation to become linear more quickly for these firms. I hypothesize and results show that the returns-earnings relation is nonlinear over the shorter measurement intervals and become linear as the measurement interval is lengthened for firms with shorter operating cycles. The returns-cash flows relation is also nonlinear for most operating cycle partitions over shorter windows and approximates linearity for most operating cycle partitions over longer intervals. On average, earnings explain a higher proportion of returns than do cash flows for all measurement intervals. This result is even more pronounced when well-specified models are employed.
Author: George C. Christy Publisher: John Wiley & Sons ISBN: 0470484985 Category : Business & Economics Languages : en Pages : 214
Book Description
The purpose of this book is to explain Free Cash Flow and how to use it to increase investor return. The author explains the differences between Free Cash Flow and GAAP earnings and lays out the disadvantages of GAAP EPS as well as the advantages of Free Cash Flow. After taking the reader step-by-step through the author's Free Cash Flow statement, the book illustrates with formulas how each of the four deployments of Free Cash Flow can enhance or diminish shareholder return. The book applies the conceptual building blocks of Free Cash Flow and investor return to an actual company: McDonald's. The reader is taken line-by-line through the author's investor return spreadsheet model: (1) three years of McDonald's historical financial statements are modeled; (2) a one-year projection of McDonald's Free Cash Flow and investor return is modeled. Five other restaurant companies are compared to McDonald's and each other using both Free Cash Flow and GAAP metrics.
Author: David A. Holland
Author: David A. Holland
Author: Peta Stevenson-Clarke
Author: AICPA
Author: Aswath Damodaran
Author: David T. Larrabee
Author: Aswath Damodaran
Author: George T. Friedlob
Author: Stephen R. Foerster
Author: Kirsten Lynn Anderson
Author: George C. Christy