Reference no: EM132875328

1. Why can we not calculate the required return (Ke)from the Gordon- Shapiro model(p0= DIV0(1+g)/(ke-g) instead of using the CAPM ?As we know the current dividend (Div0)and the current share price(p0),we can obtain the growth rate of the dividend from the formular g=ROE(1-p)/(1-ROE(1-p),p being the payout.

2. Assume I calculate g as ROE (1-p)/(1-ROE(1-p)) and the Ke from the CAPM. I replace both values in the formula PER =(ROE(1+g) -g)/ROE (Ke-g) but the PER I obtain is totally different from the one I get by dividing the quotation of the share to the earnings per share. Is it possible to interpret that difference as an overvaluation or undervaluation of that share on the market?

3. I was assigned a valuation of the shares of a pharmaceutical laboratory. Which valuation method is more convenient?

4. I need to know how to value a company well, but I cannot clearly see the valuation process of a company starting from its past income statements. What are the systematical steps I need to take? Firstly , I think I should elaborate the provisional statements for the following fiscal years and then calculate the cash flows, discount them at the present moment (with a discount factor), add the terminal value to it and the difference between the book net value and the market value of intangibles. I really need that these steps be methodical and easy to understand so I can use them as a guide when valuing a company.

5. What is a 3 * 1 Split?

6. 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 could be used in my valuation. It is small business with just two employees, the owner and an apprentice. This type of tax system exempts them of 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 tangible assets that is the work). Obviously, discounting cash flows in not an appropriate method in this case. Actually, I don't know which profession fits better the job that the court assigned to me.

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

8. How can 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.

9. 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?

10. I have a doubt regarding the Enron case. How could such a prestigious investments bank advice investing when the quotations of the shares were falling?

11. 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."

12. Could we say that goodwill is equivalent to brand value?

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

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

15. 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?

16. Is it correct results' capitalization" which, according to the Institute of Accounting and Auditing (ICAC), represents the to say that the value of the shares is the "value of the" book value of shareholder's equity, corrected by increases or increasing in value which could be demonstrated, in the case of the goods, rights and obligations of the company at the reference date?"