Reference no: EM132921037

Question

1. How can an auditor spot acts of creative accounting? I mean, for example, the excess of provisions or the non-elimination of intra group transactions with value added.

2. A court assigned to me (as an economist and auditor) a valuation of a market butcher's. The butcher's did not provide any simple income statements or any valuable information which I could use in my valuation. It is a small business with just two employees, the owner and an apprentice. This type of tax system exempts them of IESE Business School-University of Navarra - 5 certain commercial and fiscal informative statements. I think it is very important to underline that the object of the valuation is not a company, but rather a business, a work position. Although it has recurrent customers the value of its tangible assets is solely the value of its tools, as the premises are rented (I think it is impossible to value the intangible asset that is the work). Obviously, discounting cash flows in not an appropriate method in this case. Actually, I do not know which profession fits better the job that the court assigned to me.

3. What repercussions do variations in the price of oil have on the value of a company?

4. I heard talk of the Earnings Yield Gap ratio, which is the difference between the inverse of the PER and the TIR on 10-year-bonds. It is said that if this ratio is positive then it is more advantageous to invest in equity. How much confidence can an investor have in such an affirmation?

5. I have a doubt regarding the Enron case. How could such a prestigious investment bank advise investing when the quotations of the shares were falling?

6. Is the following affirmation of an accountancy expert true? "The valuation criterion which reflects the value of the shares of a company in the most accurate manner is based on the amount of the shareholder's equity of its balance sheet. Stating that the value of a company's shares equals its book value is a valid argument."7. Could we say that goodwill is equivalent to brand value?

8. Could we say that the value of shares is intangible?

9. When calculating the WACC, is the weighting of the debt and the shares done with book values of debt and shareholder's equity or with market values?

10. The market risk premium is the difference between the historical return on the stock market and the risk-free rate, for every year. Why is it negative for some years?