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
Part B This case is intended to be an introduction to the various methods used in capital budgeting and looks at some of the decisions that may have to be made when evaluating pro

What is in store for banking consolidation? A: Merger activity is a natural procedure by which companies make themselves more effective and better able to compete for customers

What are the Government Securities Government is one of the biggest borrowers from capital and money market. We have already taken a look at money market securities offered by

A/A2 is generally the second- or third-highest rating that a rating agency gives to a security or carrier. This rating indicates that there is a comparatively low risk of default a

A simple passive strategy involves building a portfolio and holding it through time. The coupons as well as the proceeds of matured bonds are just reinvested in new iss

explain the concept of working capital management?

The stocks of Microsoft and Apple have a correlation coefficient of 0.6.  The variance of Microsoft stock is 0.4 and the variance of Apple stock is 0.3.  What is the covariance bet

Q. What is Accumulated Depreciation? Accumulated Depreciation - Total DEPRECIATION pertaining to an ASSET or group of assetsfrom the time the assets were placed in services unt


How do tax considerations affect the cost of debt and the cost of equity? For the reason that interest on debt is tax deductible to the issuing firm, the higher the tax rate th