金融经济学Valuation and shareholder value.ppt

1、Valuation and Shareholder Value,2,The Shareholder Value Approach,3,Equity = Discounted dividends,Why is the stock price (value) the discounted sum of the future cash flows (dividends)?,4,Derivation,The expected return on the stock is, by definition:,Which, rearranged, gives:,And:,5,Derivation,The sa

2、me applies to P1, which can then be substitutied in P0, and so on recursively,6,Dividends vs Cash Flows,Is equivalent to (remember this proposition?):,7,Free Cash Flow,Value = sum of discounted expected free cash flows Definition: FCFt is the net cash flow received by all security holders of the fir

3、m together Cash flow to equity holders + cash flow to debt holders Or: FCF is the net cash flow generated by the firms invested capital,8,Analysis of Free Cash Flows,Free Cash Flow = Cash Inflow cash outflow Cash Inflow = Sales x Operating Margin Cash Outflow = Fixed Assets + Working Capital + Taxes

4、 Cash Flow to Equity = FCF Payments to debt-holders,9,A view from the balance sheet,Assets,Liabilities,FA,Equity,STA,Debt,Cash,STL,Assets,Liabilities,FA,Equity,WC = STA - STL,Debt,Cash,Total Liabilities,Total Assets,Invested Capital,10,Example Sbux, balance sheet,11,Example Sbux, invested capital,PR

5、ACTICE Calculate your companys invested capital for the last couple of years,12,Example Starbucks,PRACTICE Calculate your companys cash flow statement for the last couple of years,13,Formula Approach to valuation,In a nutshell, FCF is: EBIT (1-T) I, Where I is net investments (why?) Suppose a firm i

6、s not growing:,Which equals:,14,Formula Approach to valuation,If a firm invests It and makes a return of rt every year in the future, EBIT2 (1-T) = EBIT1 (1-T) + r1 I1 EBIT3 (1-T) = = EBIT2 (1-T) + r2 I2 = EBIT1 (1-T) + r1I1 + r2 I2,Current earnings,Earnings fromnew investments,15,Formula Approach t

7、o valuation,Each cash flow will look like:,Which, with a bit of algebra, yields:,Value of assets in place,Value of growthopportunities,16,Formula Approach to valuation,If we assume the firm always invests the same fraction of its earnings (K), and that it always makes the same yearly return on the investments (r), The formula above boils down to:,17,Formula Approach to valuation,Which again reduces to: You see that the firm is able to grow at a rate g = Kr in perpetuity (“sustainable g