--%>
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 : Explain market efficiency hypothesis

    According to what I read inside a book, market efficiency hypothesis means that the expected average value of variations is zero in the shares price. Thus, the best estimate of the future price of a share is its price now, as this incorporates all the available inform

    		•
  • Q : WCR fend off takeover bid WCR fend off

    WCR fend off takeover bid: The WCR estimation ensures that a firm takes corrective action in time to correct its WC status. This ensures that the firm is always in a positive WC status. In other words, the firm will be able to pay off all its short-te

    		•
  • Q : Did you see Vueling case Did you notice

    Did you notice the Vueling case? How is this possible that an investment bank sets the objective price of its shares in €2.50 per share upon the 2nd of October, 2007, just after replacing Vueling shares at €31 per share in J

    		•
  • Q : What repercussions do variations in

    What repercussions do variations in the oil price have on the value of a company?

    		•
  • Q : What is Project Budget Project Budget :

    Project Budget: Collecting all costs related with completing a project is budget process. The Project Management Institute states that "aggregating the predictable costs of individual actions or work projects (establishing) an authorized cost baseline

    		•
  • 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 : State Transition Management Transition

    Transition Management: It is a financial service accessible to institutional investors who require making significant modifications to their portfolios, like merging, selling, or substantially restructuring them. This procedure can expose investors to

    		•
  • Q : Financial engineering financial

    financial engineering examples,benifits,disadvantages

    		•
  • Q : How can industrial company inflate

    How can any industrial company inflate the value of its inventory so as to decrease net income and the taxes is has to pay in a year?

    		•
  • Q : Problem on financial manager

    Assume that you are a financial manager of Yuen Cheong Manufacturng Company. Due to the rising demand of product X, Yuen Cheong Manufacturng Company decides to open a new production plant in China, so it needs to take a loan of US$1 million. Bank A offers Yuen Cheong

    		•