Abstract
This paper compares and contrasts the capital asset pricing model (CAPM) and the discounted cash flow (DCF) model in valuing common stock. The paper holds that, because of the complexity and importance of valuing common stock, the above techniques have been devised over time to accomplish this task. It points out that CAPM focuses on inputs to calculate stock prices that are external to the firm while the DCF model focuses on internal factors. Also, CAPM is concerned with growth rate, while DCF is concerned with estimated returns. The paper concludes that both models are important to investors and expanding companies.

From the Paper
"For a firm that is expanding, it is difficult to establish a proper growth rate for the DCF. If past growth rates in earnings and dividends have been relatively stable, and if investors appear to be projecting a continuation of past trends, then the growth rate may be based on the firm's historic growth rate. However, if the company's past growth has been abnormally high or low, either because of its own unique situation or because of economic fluctuations, then the growth rate has to be estimated in some other manner."

Tags:stocks, investment, stock, market

Abstract
This author uses the tool trade portion of ACME and writes the brief for the POV that we were going to involve another company in securing our IP and our customers IP. The author also creates a problem and solution for determining the DCF of ACME. The author discusses how the late 1990s saw the rise of corporate valuations arising from ownership of various forms of intellectual property, rather than the traditional value arising from production and sale of goods or services.

From the Paper
"The capital we utilize in ACME is directly hinged on our use of human capital, structural capital, intellectual assets and intellectual property. Although ACME cannot function without all four of the above it is intellectual property that concerns us today ("Intellectual Property Valuation"). As a company we need to look out our patents, trademarks, copyrights trade secrets and know-how. Through theses pieces of intellectual property we can see where we have been an where we want to go and we can re-evaluate..."

Tags:trade secrets, capital, assets

Abstract
The paper discusses how for a firm that is expanding, it is difficult to establish a proper growth rate for the DCF, since, if past growth rates in earnings and dividends have been relatively stable, and if investors appear to be projecting a continuation of past trends, then the growth rate may be based on the firm's historic growth rate. The paper explains, however, that if the company's past growth has been abnormally high or low, either because of its own unique situation or because of economic fluctuations, then the growth rate has to be estimated in some other manner.

From the Paper
"More individuals own stock more than ever. Stock pricing is now expansive and is an important aspect of financial economics. A stock is generally considered over-valued if the price-earning ratio is high relative to the rate at which a company's earnings are likely to grow. The converse holds true for an under-valued stock. Because of the complexity and importance of valuing common stock, various techniques for accomplishing this task have been devised over time. The sections that follow will compare and contrast the CAPM and DCF models. CAPM is an equilibrium theory that relates the expected return of an..."

Tags:capm, discounted, model

Abstract
This paper describes and analyzes some of the different methods for appraising the value of a company that is being sold. The paper looks specifically at methods such as net-asset valuation, price-to-earnings ratio and discounted cash flows. It also describes the goals and the conditions surrounding the selling business, as well as the goals of the purchasing company.

Table of Contents:
Net-Asset Valuation
Price-To-Earnings Ratio
Discounted Cash Flow
Conclusion

From the Paper
"The U.S. economy is arguably the most diversified in the world, and this allows for many different types of businesses to flourish. Companies that supply raw materials, manufacture goods, distribute items, or provide services are all part of the American economic landscape, and these businesses are regularly bought and sold. Because of the variety of businesses that can be purchased or acquired, there are several different methods for arriving at a proper valuation. Three of the common valuation methods are net asset, price-to-earnings ratio, and discounted cash flow. Each of these methods is appropriate for given situations - net asset, for example, may be the only reliable way to valuate a business that is focused on assets, such as real estate. However, all three of these methods have their limitations. Price-to-earnings, for example, rewards stock speculation and can lead to overpaying. But, taken together, these three valuation methods provide a useful suite of tools that can handle many different situations."

Tags:net-asset price-to-earnings, discounted cash flows

Abstract
This paper examines several models that are used to determine fair value, specifically, the net asset approach, the discounted cash flow approach, the earnings multiplier approach and the capitalized earnings approach. The paper analyzes each of these in turn, with respect to their technique, advantages and disadvantages. The paper also considers the assumptions of each that are the basis for the commonly applied valuations and discounts.

Outline:
Introduction
Net Asset Approach
Discounted Cash Flow Approach
Earnings Multiplier Approach
Capitalized Earnings Approach
Basis for Commonly Applied Premiums and Discounts
Conclusion

From the Paper
"The net asset approach ascribes the value of the business as the difference between its net assets and net liabilities. In other words, the value of the business is the current value of the equity. As with any valuation approach, the first thing that needs to be done is to convert the statements into ones that adhere to GAAP, to allow for proper understanding and comparison. Once that has been done, the net asset approach prescribes a conversion from book value to market value. Remember that publicly-traded companies receive their valuation from the market."

Tags:net, asset, discounted, cash, flow, approach, earnings, multiplier, capitalized, earnings, assumptions

Abstract
The paper provides a brief financial overview of Wal-Mart. The paper then utilizes discounted cash flow valuation techniques, relative valuation techniques, cost of capital and capital budgeting in order to determine if Wal-Mart's stock is over-valued, under-valued, or just right. The paper shows how, irrespective of the quantitative analysis employed, the calculated stock value for Wal-Mart falls within the threshold and the current stock price is close to current stock value.

Outline:
Introduction
Brief Financial Overview of Wal-Mart
Valuation and Rates of Return
Free Cash Flow Model
Dividend Discount Model
Valuation Techniques
Cost of Equity
Capital Budgeting and Risk

From the Paper
"A stock is generally considered over-valued if the price-earning ratio is high relative to the rate at which a company's earnings are likely to grow. The converse holds true for an under-valued stock. Because of the complexity and importance of valuing common stock, various techniques for accomplishing this task have been devised over time. The techniques that will be used encompass: 1) discounted cash flow valuation techniques, where the value of the stock is estimated based upon the present value of some measure of cash flow, including dividends, operating cash flow, and free cash flow; and 2) the relative valuation techniques, where the value of a stock is estimated based upon its current price relative to variables considered significant to valuation; 3) cost of capital; 4) capital budgeting."

Tags:cash, flow, relative, valuation, techniques, capital, budgeting

Abstract
The paper introduces the main topic of value based management (VBM), presents its advantages and limitations and gives a brief history of the evolution of this concept. The paper describes the concept of value, value drivers and its creation. An important aspect of the paper is a discussion of the elements needed to implement VBM into organizations. The author concludes by analyzing briefly the influential works and theories presented by major VBM thinkers.

Table of Contact:
Abstract
Introduction to Value Based Management
Advantages of Value Based Management
Limitations of Value Based Management
History of VBM
Components of VBM
Creating Value
Elements of Value Creation
Types of Value Creation in Mergers and Acquisitions
Managing for Value
Measuring Value
A Contrast between VBM and Task Based Management (TBM)
Value Drivers
General Model of Value Drivers
Intangible and Tangible Value Drivers
Value Measuring Methods
Discounted Cash Flow (DCF)
Economic Value Added (EVA)
Market Value Added (MVA)
Cash Flow Return on Investment (CFROI)
Analysis of Value Drivers
Implementation of VBM
Implementation from the Top
Dedicated Cross Functional Team
Value Oriented Reward
Benchmarking Value Creation
Performance Measurement
How Does VBM Measure?
What Does VBM Measure?
Measuring Tools
Managerial Actions
Results of VBM Implementation
Literature Review of Value Based Management
Conclusion
Appendix: Interaction between Strategy and VBM

From the Paper
"Intangible drivers include reputation, location and quality of the products while tangible drivers are organization's advanced technology, equipment, strategic assets, infrastructure etc. Intangible assets (also called intellectual property) and human resource can be confined through legal protections and business strategies. Legal protections include the registration of trademark, copyrights, protection of information and trade secrets, protection of property, and agreement to key employees as well as the contracts with partners, clients, and other suppliers."

Tags:planning, capital, drivers, measurement, rappaport

Abstract
This paper analyzes the real options theory, and explores how the theory applies to real-life financial management scenarios. The paper explains that real options theory uses traditional financial options theory and applies them to real investments; this adds flexibility to management decisions, allowing management to capitalize on future uncertainties. Theoretically, the paper asserts, real options theory can bring the traditional discipline of the financial markets to company opportunities; this is important, because financial markets have traditionally had an advantage over real investments, in that they provide greater opportunities to exit financial strategies that are not working. The paper concludes that real options theory is a good tool to value firms in today's increasingly difficult-to-value industries; however, in an era when the markets have gone haywire and the experts disagree about the economic future of the markets, one must wonder about the future applicability of real option analysis.

Outline:
Introduction
Definition
Discounted Cash Flow Analysis
Real Option Valuation
Financial Planning
Real Option Analysis and Venture Capitalism
Conclusion
References

From the Paper
"Real options analysis involves a different approach to financial modeling than traditional business analysis. Real option analysis presents three types of option categories. These categories include: invest/grow, defer/learn, and divest/shrink (Mauboussin, 1999). The invest/grow category represents the optimistic point of view and presents three options for a business: scale up, switch up, and scope up (Mauboussin, 1999). The scale-up option means that "well positioned businesses can scale up later through cost-effective sequential investments as market grows" and would be most useful in high technology, multinational, strategic acquisition and R&D intensive businesses (Mauboussin, 1999). The switch-up option is "a flexibility option to switch products, process on plants given a shift in underlying price or demand of inputs or outputs" and is best utilized when the company deals with small-batch goods production, utilities, or farming (Mauboussin, 1999). The scope-up option applies when a business is ready to extend its traditional scope of business and implies that "investments in proprietary assets in one industry enables company to enter another industry cost effectively," and is used with companies that are the de-facto standard bearers in an industry or companies with a lock-in (Mauboussin, 1999).:\"

Tags:valuation, proprietary, asset, pricing, model

Abstract
This paper explains that the Real Option Valuation technique, which involves the prediction of the returns with an assumption that the asset valuation is closely connected to the management of assets, is an alternative over the discounted cash flow technique. The author clarifies that the Real Options Valuation technique emphasizes the value of the flexibility of the management while making decisions during the operation of the project; thus, it integrates the strategic planning options, such as to include, defer, abandon and other choices, which prevents committing error decisions. The paper relates that a weakness of the Real Options Valuation approach is that it neglects the influence of other parties.

From the Paper
"The terminology, Economic Value Added, is also used to mean the economic profit. A positive economic profit indicates greater returns of the company over the cost of capital. In order that the company operates with a real profit it should be ensured that the returns are more than the cost of capital conversely it leads to loss. The long term investments are associated with uncertainty, and therefore necessitate firm decision making techniques analyzing and estimating the probability of outcomes taking and the values of these expected outcomes. Even though the firm managers try to put all their efforts for reducing risk taking assistance of the best possible information available, the uncertainty of weather and markets cannot be avoided. This makes essential the firms to depend upon the various decision making techniques while making strategic long term investments."

Tags:prediction, valuation, assets, flexibility, capital

Abstract
The paper provides relevant definitions, comparisons and an analysis of the effectiveness of three different investment evaluation methods that are commonly used to value companies: (a) net asset value, (b) price: earnings (P:E) ratio, and (c) discounted cash flow. The paper records a summary of the research and salient findings.

Outline:
Introduction
Review and Discussion
Conclusion

From the Paper
"Discounted cash flow. According to Hussey (1999) the discounted cash flow (DCF) is, "A method of capital budgeting or capital expenditure appraisal that predicts the stream of cash flows, both inflows and outflows, over the estimated life of a project and discounts them, using a cost of capital or hurdle rate, to present values or discounted values in order to determine whether the project is likely to be financially feasible" (p. 131). A number of appraisal approaches incorporate the DCF principle in their analyses, such as the net present value, the internal rate of return, and the profitability index; in addition, most computer spreadsheet applications include a DCF appraisal routine (Hussey, 1999). On the downside, though, Lippitt and Mastracchio (1993) report that "the discounted cash flow method ... is infrequently used, as it superficially appears to be a difficult procedure to perform," a reference to the complexity of the calculations involved; the authors also note the infrequency of the use of the DCF method, but suggests that the problem is not just complexity of calculations, but rather the speculative nature of the projections necessary to employ DCF. "

Tags:organizational, goals, evaluation, methods, profitability, ratios