Shareholder Value

Week 7 Chapter 6: Investors in the Share Market True/False QUESTIONS 1. Investing in shares of publicly listed corporations should, on average, over time provide a higher return than investing in fixed-interest securities. a. True b. False 2. Investments through a stock exchange are limited to ordinary shares issued by listed corporations. a. True b. False 3. Portfolio theory contends that a diversified share portfolio enables an investor to significantly reduce the portfolio’s exposure to systematic risk. a. True b. False 4. A share that has a beta of one is twice as risky as an average share listed on a stock market. a. True b. False 5. Shares that typically demonstrate a negative price correlation will usually move in the same direction

Which classification system is available with EQS as a criteria for your screen of equities?

According to my analysis of the Accessline’s proposed term sheet, I do not believe that Apex would serve its own interests, or those of its investing partners, by investing in Accessline according to the terms proposed. By investing at the proposed valuation, according to the proposed control and incentive structure, Apex would be shouldering a disproportionate share of the risk should Accessline fail to meet its performance targets, or require fresh inflows of capital from future investment rounds. Nor can Accessline take the sort of steps necessary to protect its investment in the case of management failure.

Equity shares can be described more easily than fixed income securities. However, they are more difficult to analyse. Fixed income securities typically have a limited life and a well-defined cash flow stream. Equity shares have neither. While the basic principles of valuation are the same for fixed income securities as well as equity shares, the factors of growth and risk create greater complexity in the case of equity shares .

“Let me keep my distance, always, from those who think they have the answers. Let me keep company always with those who say “Look” and laugh in astonishment and bow their heads” (Oliver, 2009, p. 62). The words of Mary Oliver surface the value of ambiguity in the face of certitude. They reflect the stance of humility integral to the role of a truth seeker. It is anticipated that in proving a theory or belief, one seeks evidence in pursuit of truth to provide clarity around unanswered questions. For some, evidence is understood as a “collection of facts believed to be true” (Melnyk, 2015, p. 4). For others, evidence is “something that yields relative confidence in the truth of some proposition that can’t be either logically proven or directly

Corporate values and personal values align together in a parallel structure, it is difficult to abide by one of the values, when your character does not believe in the other set of values. If we begin to dissect the first statement Pottruck relayed to the readers, he states that his company had a defined set of business ethics. The company was built on the principle of “no conflict of interest”, they believed in expressing their values without compromising their guidelines, organizational values, and their codes. However, as time grew onwards, they realized that maximizing their brokerage commissions off of their “we will not give investment advice” towards their clients resulted in what can be assumed to be hostility and upset in the pit of their clientele. In this specific case, I do believe that corporate values should adapt to what the company’s target market may be relaying to the company in the masses. Otherwise, I do believe it is safe to assume that if ancient corporate values that were founded within a company

goals that promote individuation, and those that promote affiliation in generating individual differences in self-construals (Guisinger and Blatt, 1994)( Kagitcibasi,2005)( Markus and Kitayama, 1991) (Singelis, 1994). Others have created details that formulations that refer to differences in the perspective people take vis-à-vis the self (Kitayama and Imada,2008), distinctive variations of propositional and, to a lesser degree, conceptual self-representations (Schlicht,2009), diverse levels of inclusiveness of the self's conceptualization (Brewer and Gardner, 1996), and diverse degrees and extends to which people are connected in an informal community (Muthuswamy,2007).

ohnson, J., & Higgins, A. (2014). Evaluating the fair market value to pay for performance. Healthcare Financial Management, 68(4), 80-54.

If the number of outstanding shares is reduced by a buyback of shares then the EPS will increase if the EAT remains unchanged. However the EAT is reduced since there is interest expense. If the dividend payout remains the same then the dividend paid per share will increase as well. The debt interest would be 13% of $3 billion which is $390 million. EBIT in 2001 was $527,366,000. So the EBIT is $137,366,000. Then this is taxed at 40% so the EAT is $82,420,000. So by taking on more debt the EAT diminishes so the earnings per share will drop dramatically. Dividends affect next years earnings as they are taken out of the EAT.

b. MM says total value of firm is still $4 million. $1 million of debt implies total value of equity is

It is hard to value private company stock. A stock certificate is a piece of paper that entitles you to something of highly uncertain value, and could well be worthless in the future, or highly valuable, depending on the fate of the company.

Conversely, looking at the income statement for PMWL, operating income shows healthy gains of $45,862, which means the operating expenses are significantly lower in comparison to AWBL’s. However, PMWL’s cost of goods sold appear abnormally high, which makes an investor question whether this company is at it’s maturity phase in the product life cycle, and how much additional capital is necessary to bring this figure down to a number that leverages economies of scale and allows for profit maximization.

is one of Canada’s top hoteliers in the mid-market, owning interests in 16 hotels in Canada and the United States. Furthermore NGI is in ownership of 2,200 rooms in 17 hotels across Canada and the United States. The Company is expert in all facets of the hotel business, from marketing to building to management. Focused on creating the best return and value for all stakeholders, Northampton’s market-sensitive strategy is to acquire or build hotels that provide great value and superior accommodation. Gratefully, NGI excels in this sector by offering services that exceed expectations while still posting industry-leading margins. Besides acquiring and developing undervalued and underutilized hotel assets, NGI also provides superior overnight accommodations at mid-market prices. This has been done through aggressive marketing, re-branding and ongoing hotel upgrades.

Shareholder Value or Financial Perspective: Holy Grounds will find its niche and be competitive in that it is a different kind of coffee house to the norm appealing to a uniquely religious market. It is a coffee house that offers uplifting Christian-based music along with thought provoking lectures that strengthen the mind and spirit of the typical Christian college student. Holy Grounds will also offer organic healthy food choices and by doing so will support local farm growers as well as support the local economy. This will provide further value to the shareholder. In the United States with a population of over 290 million people, only 21,400 coffee houses exist. These numbers leaves opportunity for Holy Grounds within the competitive marketplace of coffee houses. Customer Value Perspective: The customer will gain both nutritious and religious value. He/ she will have quality organic treats whilst being treated to Christian music and motivational speaking opportunities that will be interesting to a diversified Christian denominational population. Events such as lectures and concerts will be presented by regional pastors and top-selling authors as well as regional church ministries and national recording artist on the Christian radio networks. There will be room too for small meetings for various Christian events. Its appliances and technology will be up to-date with the cafe, for instance offering new coffee machines that make mocha iced coffees as thick as a milkshake.

I. Introduction of company valuation methods and process........................................................3 1. Abstract................................................................................................................................3 2. Valuation methods...............................................................................................................3 2.1 Balance sheets – Based methods