Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up. Download Free PDF. Advanced Corporate Finance Syllabus. Carlo Giovannelli. A short summary of this paper. Download Download PDF. Translate PDF. Nowadays people know the price of everything and the value of nothing…. Course Objective 2. Course Prerequisites 3. Course Structure 4. Class Structure 5.
Final exam 6. Case Discussion 7. For information contact: mvulpiani deloitte. Vulpiani, Lecture notes. Pratt and Roger J. The Business Valuation. Evidences from the market. Main valuation methods. Levering and Unlevering methods Hamada formula. If not, how are they different? Use the bottom-up levered beta to estimate divisional cost of equity. Are there significant non-cash charges and working-capital needs? The statement of cash flows will provide some breakdown, as will the footnotes to the financial statements.
Use the unlevered beta for each business to estimate a levered beta and cost of equity. Use the same debt ratio and the cost of debt for the firm to estimate a cost of capital for the business division. They almost never specify investment decision rules, though managers may sometimes mention them in the context of explaining why they made a specific investment.
Has it taken good investment projects? Are the assets tangible or intangible? If they are intangible, what are the costs of monitoring stockholders or bond covenants? How much does it value flexibility? If they are different, explain why. If a rating constraint were imposed, what would it be? What is the optimal debt ratio of the firm at that level of normalized operating income? If so, how has it earned that reputation? To get the other inputs needed for the analysis, check the historical financials on the firm.
Value Line also provides information on other firms in the industry individually in its database. Has it paid dividends, bought back stock, or spun off assets? How much did it actually return? Do they like dividends, or would they prefer stock buybacks?
How valuable is preserving flexibility to this firm? Do regression, if necessary - Relative to the rest of the firms in the market, does the firm pay too much or too little in dividends?
The statement of changes in cash flows is usually the best source of both. Data on stock returns and the returns on a market index over the period of dividend analysis are also required.
What types of financing would it expect to use? If it is a publicly traded firm, it can raise equity from common stock and warrants or options. If it is a private firm, the equity can come from personal savings and venture capital. If it is a public firm, it can raise debt from bank loans or corporate bonds. Examples include preferred stock, convertible bonds, and bonds with warrants attached to them. How fast are earnings growing?
The balance sheet should provide a summary of the book values of the various financing choices made by the firm, though hybrids are usually categorized into debt if they are debt hybrids and equity if they are equity hybrids.
The description of warrants outstanding as well as the details of the borrowing that the firm has should be available in the footnotes to the balance sheets.
In particular, the maturity dates for different components of borrowing, the coupon rates, and information on any other special features should be available in the footnotes. The information on recent security offerings equity as well as debt can be obtained from the filings made by the firm with the SEC. Firms that are planning to make IPOs or have just made public offering have to file registration statements with the SEC. There are a number of services that track forthcoming IPOs as well as seasoned offerings.
If so, how responsive is management to stockholders? If so, how is it managed? How do markets get information about the firm? How long has he or she been CEO?
If not, what career path did the CEO take to get to the top? What from did the compensation take salary, bonus, stock, or options? How long have they served as directors? For firms that are not listed in the US, this information is much more difficult to obtain. However, the absence of readily accessible information on directors and top management is revealing about the power that resides with incumbent managers.
The list of analysts following a firm can be obtained from publications such as the Nelson Directory of Securities Research. For larger and more heavily followed firms, the archives of financial publications e. How much is invested in inventory, accounts receivable and payable? Run a peer-group analysis, controlling for firm size and risk, and examine whether the predicted values are greater or less than the actual values. What is the breakdown of those holdings?
How much did the firm show as unrealized gains or losses in such holdings in the most recent year?
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