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Many financial analysts estimate the value of operating leases by discounting rental payments provided in the annual report at the cost of debt.
When is cash flow return on investment (CFROI) more appropriate to use than ROIC? When is CFROI less appropriate to use than ROIC?
If R&D is capitalized, what will be the starting R&D asset, investment in R&D, amortization of R&D, and ending R&D asset by year in the five-year forecast?
Describe the impact of high inflation on the financial statements of a company. What unique challenges does inflation present for analysis of historical perform
Explain how an increase in inflation affects a company’s depreciation tax shields and what would be the resulting impact on the company’s value.
You have estimated the NOPLAT for each of the divisions in a three-division firm at $40 million, $60 million, and $100 million.
LeverCo is financed entirely by equity. The company generates operating profit equal to $80 million. LeverCo currently trades at an equity value of $900 million
Competitors BlueBev and RedBev have the same long-term prospects concerning growth and ROICs.
What are the enterprisevalue-to-EBITA multiples for both companies? Does higher growth lead to a higher multiple in this case?
Why should one use forward-looking multiples as opposed to backward-looking multiples when valuing companies?
The company currently generates $120 million in revenue but is expected to shrink to $100 million next year.
What challenges did the financial crisis of 2008 and its aftermath pose for estimating a firm’s cost of capital? How should one handle these challenges?
Suppose that the median price-to-earnings ratio for the S&P 500 is 15.0. If the long-run return on equity is 13.5 percent.
As CFO, you are trying to allocate investment funds across your threedivision firm. You observe the revenues last year as $2.0 billion, $1.5 billion.
You are an equity analyst and have computed the following figures for two manufacturers of paper products.
PaperPro had previously acquired PaperExpo, which independently generates $800 million per year in revenues, with no material growth.
Which interest coverage ratio, earnings before interest, taxes, depreciation, and amortization (EBITDA) to interest or EBITA to interest.
The chief financial officer of PartsCo has asked you to rerun the forecast of the company’s income statement and balance sheet at a growth rate of 3 percent.
The chief financial officer of PartsCo returns and explains that there is a possibility of a huge contract being awarded to the company.
Using the economic-profit formula, what is the continuing value for ApparelCo as of year 5?
Given intense competition for new store sites, you believe new stores will earn only their cost of capital.
Over the past year, profitability has been strong, and the share price has risen from 15 rupees per share to 25 rupees per share.
Identify and discuss real examples of companies with a competitive advantage based on customer lock-in as opposed to product innovation.
Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than firms in the hardware and equipment indust
Discuss potential explanations for the increase in median ROIC and the widening of the distribution of ROICs across all companies over recent decades.