It aims to understand the operating, financial and capital market performance of the firm. It begins with analysis of financial statements of a firm. Financial statement includes balance sheet, income statement and cash flow statement and these information helps to determine the financial makeup of the firm. It focus on dividends paid, operating cash flow, new equity issues, and capital financing. The growth rates (of income and cash) and risk levels (to determine the discount rate) are used in various valuation models.
Life-cycle hypothesis are developed by Ando & Modigliani (1963) to help economists to understand the dynamic behaviour of consumers and solve economic decision on retirement savings regarding the rationalization of an individual’s income. The hypothesis is designed to maximize the utility of one’s income over his lifetime. Figure 2.1 Life-cycle model to predict saving behaviour Source: Rayat, R., Scott, S., Mullen, E., & Chen, Y. (2015) Modigliani's Life Cycle Theory of Consumption. Retrieved August 5, 2016 from https://rpubs.com/RAAJ/110886 Figure 2.1 provides a graphical representation.
Market risk premium: Average of estimates made by NYU and Bloomberg up to Apr. 2016-8.19% C. Beta: regression on stock return against market return (Heng Seng Index, Apr. 20106-Apr.2016)-adjusted beta=1.029(raw beta=1.043) 6. Growth rate: previous year reinvestment rate and ROE contribute to current year growth rate RELATIVE VALUATION Key Assumptions: 1. Comparable company: Selection is based on business nature, geography and financial conditions.
Another independent variable in this study is international diversification. This variable is measured by using the uni-dimensional measure, the ratio of foreign sales to total sales (Kang, 2013; Majocchi & Strange, 2012). Control variables Finally, this study used some control variables, including company size (natural log of number of total employee), profitability (Return on Asset; percentage of earnings before interest and taxes to total assets), liquidity (current ratio; current asset to short term liabilities), financial leverage (Debt asset ratio; Total debt to total asset), Intangible assets (Market to book ratio; Market price to book value), compay’s age (number of year company established), type of industry (CSP industry based on two digit ISIC), ownership concentration (public ownership: percentage of public ownership), and Independent commissioner (number of independen commissioners in companies)
The explanatory variables used in this study were book value per share (BVPS), earnings per share (EPS) and operating cash flow per share (OCFPS), while the dependent variable was market value per share (MVPS). A sample of 310 firms was drawn from 5 largest industrial sectors in Sri Lanka. The study however employed the Ohlson’s (1995) price model in addition to an alternative model which was a modification of the price model to cater for operating cash flow per share which was part of the independent variables used in the study. Consistent with prior studies, overall findings from this study according to Musthafa & Jahfer (2013) was that accounting information were value relevant in Sri Lanka since BVPS, EPS and OCFPS all have positive relationship with market value per share and were statistically significant at 0.01 and 0.05 levels of
Ten years data of six emerging equity markets namely Brazil, china, India, Mexico, turkey and Russia has been taken for study purpose. VaR is calculated to estimate the probability of risk in the portfolio of these nations. Initially for data checking purpose, ADF and PP tests were applied to check the stationary of data, the result of which indicated that the data was stationary at level. Further descriptive statistics were applied to check the normality of data. This included Skweness, kurtosis and Jarque Bera.
Figure 7.1.1. Linear regression where β =1.932, after plugging in 250-day data [data from 03/03/2015 to 06/11/2015] before t-10 of Stage I [22/07/2015] Step 4: Find the Expected return for HNA Holding After getting β s from 250-day historical data of ri and rM , we found the expected return for HNA Holding by plugging in figures into the capital asset pricing model [CAPM], the formula of CAPM is shown as below: E(rit)=rf+ 훽(E(rMt)− rf) where
In such case the managers have no say on the firms’ growth direction. Alternatively, where the B.O.D has corporate governance problems, the firm is faced with financial decision problems. According to Ngugi (2008), shareholders can manipulate liquid asset at the expense of debt-holders using it as a proxy for asset substitution. According to Jensen (1986) availability of free cash flow makes managers invest in projects with negative NPVs due to conflict of interest. Decisions on non-financial factors may affect the firm heavily in the long run and if no interventions are made, this may lead to financial
According to Odean. Odean also studied overconfidence of investors. Overconfident investor trade even when their expected returns are less than the cost of investment. Further, investor’s decision to sell security is more influenced by the past performance of the security than its future
Is the stock portfolio of Yayasan Dana Pensiun Bank Indonesia optimal? 1.3 Scope and Limitations This research will analyze the stock portfolio of Yayasan Dana Pensiun Bank Indonesia at 2011 – 2014. The stock which will be analyzed if they are listed at Indonesia Stock Exchange. The data used in research is in period at January 2, 2011 – December 31, 2014. The method will be used is Markowitz theory.