--%>
Assignment Help - homework help

Explain method to analyze and to value seasonal businesses

Are there any methods to analyze and to value seasonal businesses?

E

Expert

Verified

Seasonal businesses can be valued through discounting flows using yearly data, but this needs some adjustments. The right way to value the flows is using the monthly data. Fernández (as 2003 and 2004) demonstrates that errors because of the utilization of annual data are significant. When using annual data, the computations of the value of the unlevered company and of the value of tax shields should be adjusted. Conversely, the debt we have to subtract in order to compute the value of the shares does not require any adjustment.

By using the average debt and the average of the working capital needs does not give a good approximation of the value of the company. Here not much emphasis on the impact of seasonality in company valuation as: Damodaran (1994), Myers and Brealey (2000), Penman (2001) and Copeland (2000) do not even comprise the terms “seasonal” or “seasonality” in their indexes.

   Related Questions in Corporate Finance

  • Q : Who published a book regarding

    Who published a book regarding option formula and risk neutrality?

    		•
  • Q : Who proposed modern quantitative

    Who proposed a modern quantitative methodology for portfolio selection?

    		•
  • Q : Explain company creates value for its

    Is this true that a company creates value for its shareholders in a year when this distributes dividends or when the quotation of the shares increases?

    		•
  • Q : Analysis on Stock Prices Using the last

    Using the last 3 years of closing stock prices on the first trading day of each month from January,  2010 through December 2012 for Apple (APPL) and the S&P 500 (market) for the same date range 1)    &n

    		•
  • Q : How can auditor spot acts of creative

    How can auditor spot acts of creative accounting? Means let an illustration, the excess of provisions or the non-elimination of intra group transactions along with value added.

    		•
  • Q : Applied approaches to theory development

    Discuss and distinguish between the following applied approaches to theory development:  true-income (income statement and balance sheet approaches), efficient markets, and predictive ability.  You may want to include in your discussion any articles or studies that either supported or u

    		•
  • Q : Public Finance which type of tax,

    which type of tax, direct or indirect is applicable in underdeveloped countries? Why? Show your critical areas and weaknesses.

    		•
  • Q : Calculating Super normal profit The

    The case study of an economic analysis is done for Schlumberger, oilfield Service Company.  They are No. 1 in terms of market caps, revenue and employees globally. When any references are used/outside sources (except for Schlumberger's annual reports and financia

    		•
  • Q : What impacts have on value of a

    What impacts have on the value of a business of high inflation?

    		•
  • Q : Problem on binomial option pricing model

    The share price of Cheung Kong (Holdings) Limited is currently at $100. Over each of the next two three-month periods, you expect its price will either increase by 10% or fall by 10% in each three-month period. If the Hong Kong interbank offered rate is 8% per annum w

    		•