Application of discounted cash flow model valuation: The case of Excide industries

Theoretical and practical features of the widely used discounted cash flow (DCF) valuation approach are examined in depth in this paper. This research evaluates Exide Industries by using the DCF Valuation technique. It is widely accepted that the discounted cash flow approach is an effective tool for analyzing the situation of an organization even in the most complicated circumstances. The DCF approach, on the other hand, is prone to huge assumption bias, and even little modifications in an analysis' underlying assumptions may substantially affect the valuation findings. As a result, of the sensitivity analysis, we discovered bullish, base, and worst-case scenarios with target share prices of Rs. 253.25, Rs. 171.37, and Rs.133.25, respectively, by adjusting growth and WACC (Weighted-Average Cost of Capital) values.

Illiquid Assets and the Opacity Discount in Banks’ Valuation

The paper investigates the impact of fair value accounting for illiquid assets (so-called ‘Level 2’ and ‘Level 3’ assets by accounting rules) on banks’ valuation and focuses on the change in relative weight of Level 3 (the most opaque and illiquid assets) with respect to Level 2 assets. The boundary between Level 3 and Level 2 assets is blurred and less clear than the one between Level 1 and Level 2 assets. Such unclear borderline entails corporate governance issues and provides room for opportunistic behavior by managers to opt for less transparent instruments. The paper proposes the change in Level 3-to-Level 2 assets ratio as a new measure to capture deviations in the opacity of bank assets and suggests a negative relationship between this ratio and bank’s price-to-book value. The rationale behind this relationship is that market participants interpret growth in Level 3-to-Level 2 assets ratio as an increase in bank’s opacity, since Level 3 assets might be as illiquid as Level 2 assets with the benefit of a less transparent model-based valuation technique. Based on a sample of 33 European banks from 2009 to 2018, I find that an increase of 100[Formula: see text]bps in Level 3-to-Level 2 assets ratio is linked to a decrease of about 74[Formula: see text]bps in the price-to-book value. Results are robust for different measures of firm relative valuation and using a different measure of illiquidity in fair value assets holdings (Level 2-to-Level 1 assets ratio).

How valuation approach choice affects financial analysts’ target price accuracy

This paper examines which valuation approaches financial analysts use to value a company and whether the chosen valuation approach affects the target price accuracy. To address these questions, we conduct content analyses of 867 hand-collected analyst reports on German publicly listed companies published between January 2014 and June 2017. We find that sell-side analysts more frequently use the single-period market approach when formulating target prices, followed by the multi-period income approach, and a mixture of both by combining the results, the so-called hybrid valuation approach. Additionally, we show that 612 of the analyzed analyst reports are based on a holistic valuation methodology instead of a sum of the parts valuation technique. Both univariate and multivariate analyses emphasize that the choice of valuation approach is significantly associated with the accuracy of price targets. Specifically, the income and market approach lead to significantly more accurate target prices compared to the hybrid approach. We also find that the target price accuracy is higher when analysts apply the holistic rather than the sum of the parts valuation approach to determine the fundamental value of the company. Additional results emphasize that target price accuracy improves when analysts use the sum of the parts valuation that bases solely on market or income approaches rather than hybrid approaches. Hence, we contribute to theory and practice by providing evidence on the link between the choice of valuation approach and the analysts’ target price accuracy as well as on the performance of certain valuation techniques.

Developing the business valuation technique for Mergers & Acquisitions

Subject. According to empirical data of consulting firms, the synergistic effect does not arise every time, since about 70 percent of M&A deals happen to be unsuccessful, destroying the enterprise value. Objectives. We analyze whether it is possible to make M&A more effective, and develop the business valuation technique for M&A on the basis of the real options method. Methods. The study involves methods of analysis and synthesis, generalization, induction and deduction, methods of systems analysis, statistical methods, chart and graphical techniques for statistical data representation. Results. We analyzed and determined the most applicable method for options premium valuation – the Monte-Carlo method, since it appraises non-listed companies and facilitates computations. As part of equity valuation, we suggest substituting the rating to the assessment of risk components by analyzing corporate performance indicators. Having analyzed potential deals, we proves the zero correlation between the options premium and the maximum premium, thus making a game formula of the synergistic effect. Conclusions and Relevance. The correlation between shareholders’ premium and options premium is identical to the correlation of the maximum premium and options premium. That is, the correlation does not virtually exist. As a result, we made the synergistic effect formula. The conclusions and recommendations herein can be used by business leaders to financially justify non-organic business growth mechanisms, develop the business strategy subsequently. Appraisers may also rely upon the findings to improve the quality of business value prediction models as part of M&A deals.

The fair value of the innovation. A proposal for determine it

According to the NIF Financial Reporting Standards, fair value represents the exit price that, at the valuation date, would be received for selling an asset or paid for transferring a liability in an orderly transaction between market participants. When there is no accessible exchange value of the operation, an estimate must be made using valuation techniques. In other words, fair value is the price at which a tangible or intangible asset is sold / bought between two economic entities on a voluntary basis. Even if there are complications to determine it, it must be estimated by applying valuation techniques. But what happens when the asset object of fair value is not the subject of a transaction between two economic entities? That is, what happens when the asset is the result of an internal generation process of the economic entity, such as an industrial design on which a patent can be generated? How is fair value determined in this case? This article contains the analysis of the concept of fair value contained in the financial information standards and a proposal for its determination in the case of assets generated internally in economic entities as a result of innovation projects, considering for this purpose the valuation technique of the net present value NPV.

An economic analysis due to municipal solid waste in Coimbatore district of Tamil Nadu

Negative externalities caused by municipal solid waste have led to severe pollution of surface and groundwater sources and health status, which have ultimately affected the livelihood of the poor. Environmental problems in the agricultural sector and household sector caused by solid waste in Coimbatore district have been discussed in this study. Garrett’s Score and Contingent Valuation technique have been employed for this purpose. The major constraints faced by the respondents were health hazards, unpleasant odour, poor land quality and poor quality of irrigation water. The farmers and the households in the study area are well aware about the detrimental effects of solid waste and they have expressed their willingness to pay for internalizing the negative externalities even though it is duty of local institution/Government.

PENERAPAN PENILAIAN DALAM KURIKULUM 2013 PADA TINGKAT DASAR MATA PELAJARAN PENDIDIKAN AGAMA ISLAM

In the 2013 curriculum, the concept of assessment to understand learning through competence refers to three approaches, namely assessment as learning, assessment for learning, assessment of learning. All three approaches must be taken by the teacher in the assessment activities. assessment as learning is carried out during the learning process by expecting results in the form of information to the teacher about students' readiness to understand deeper concepts. Assessment for learning. Assessment of learning is carried out by the teacher to measure the level of achievement of student competencies that can be known from previous learning assessments. In Islamic education subjects, the competencies assessed cover three aspects, namely aspects of knowledge, attitudes, and skills. Thus, the valuation technique must be adjusted so that the assessment and the results obtained are appropriate so that all interested parties can optimally utilize the results of the assessment.

Global OTC pharmaceutical packaging with a local touch

PurposeThe aim of this study is to explore the contextual influences of packaging design and its cues on respondents' preferences.Design/methodology/approachTo explore the contextuality of packaging cues, a multi-attribute valuation technique, conjoint analysis was used for two types of pharmaceutical products (painkiller and sore throat medicine) across seven countries. Data were collected among respondents (N = 461) from Finland, Ghana, Mongolia, Nigeria, Portuguese, South Africa and the USA.FindingsSimilarities and dissimilarities were observed between the product types and countries analysed in terms of the impact of packaging cues. The findings demonstrate the global and local nature of brand cues expressed in retail packaging.Practical implicationsThe study implies that some cues may serve global markets, while some cues may need to be localised in order to meet the needs of local markets. Understanding these cues and their influences on consumers' brand preferences and choices at the point-of-purchases may enable companies to enter new markets, help them create sustainable and credible global brands.Originality/valueThe study contributes to the existing retail packaging literature and pharmaceutical branding literature by providing empirical evidence of the multidimensional aspects of sensory packaging cues. Second, it contributes by showing the contextual nature of retail packaging and its associated cues for OTC pharmaceuticals.