Abnormal earnings valuation model, Financial Management

A technique for knowing a company's worth that is based on earnings and book value. It is also known as the residual income model, it seems at whether management's decisions cause a company to perform worse or better than predictable. The model says that investors must pay more than book value if earnings are more than expected and less than book value if earnings are lesser than expected

There are various other techniques for valuing companies, involving P/E ratio, return on equity, price-to-book value ratio, return on capital employed and discounted cash flow. Investors and analysts must not place too much stress on any one of these (or a number of other) measures of value as no single method can give a total picture of a company's financial performance.

 

Posted Date: 7/27/2012 1:32:08 AM | Location : United States







Related Discussions:- Abnormal earnings valuation model, Assignment Help, Ask Question on Abnormal earnings valuation model, Get Answer, Expert's Help, Abnormal earnings valuation model Discussions

Write discussion on Abnormal earnings valuation model
Your posts are moderated
Related Questions
Currently, many foreign firms from both developed and developing countries obtained high-tech U.S. firms. What might have motivated these firms to obtain U.S. firms? Answer: Se

Process The process of Securitization involves the following steps: Transfer of assets by the originator (person holding the assets) to an entity (comp

Q. Describe Factors to Analyze a Company position? - Venture capitalists may be involved in the business because of its significant growth but poorly structured finance. An equ

discuss the applicability of operating cycle in poultry industry[consider broilers]

When a company commits (implicitly or explicitly) to granting at-the-money options to employees in the future then we can view them as a forward start options. a) Explain the di

What is the role of a broker in security transactions? How are brokers compensated? Brokers manage orders to sell or buy securities. Brokers are agents who deal on behalf of an

Factoring Denotes of enhancing a business's cash flow whereby outside organizations pays a firm a certain portion of its trade debts and then gets the full amount of cash from

Bond Price is the purchase value of a bond. It can be priced either at a premium, discount or at par. It is important for the prospective buyer to know how to det

What are the negative consequences of a company holding too much cash? A company holding so much cash would be giving up the opportunity to invest much more in income producing a

What factors would you consider in evaluating the political risk related with making FDI in a foreign country? Answer: Factors to be considered as follow: a) The host countr