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eBook The relevance of Discounted Cash Flow (DCF) and Economic Value Added (EVA) for the valuation of banks ePub

by Dennis Schön

eBook The relevance of Discounted Cash Flow (DCF) and Economic Value Added (EVA) for the valuation of banks ePub
Author: Dennis Schön
Language: English
ISBN: 3638702618
ISBN13: 978-3638702614
Publisher: GRIN Publishing (August 3, 2007)
Pages: 76
Category: Finance
Subcategory: Perfomance
Rating: 4.1
Votes: 698
Formats: lrf lrf txt mobi
ePub file: 1575 kb
Fb2 file: 1111 kb

Cash Flow and Economic Value Added for the Valuation of Banks.

The Relevance of Discounted Cash Flow and Economic Value Added for the Valuation of Banks.

1 The Direct Cash Flow Calculation . 2 The Indirect Cash Flow Calculation . Cash Flow versus Free Cash Flow . Fundamentals of DCF valuation . Techniques of DCF . 1 The Entity Model .

The Economic Value Added (EVA) is preferable because it shows how much value has been and will be. .See the screenshots of 2015 Summary tab for the heart of the model where DCF & EVA corporate values are compared

See the screenshots of 2015 Summary tab for the heart of the model where DCF & EVA corporate values are compared. This excel sheet contains complex financial modeling and is intended for professionals.

and economic value added (EVA™) concepts to each other and to the more traditional applications of DCF thinking.

Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of the cash flows within the forecast period together with a continuing or terminal value that represents the cash flow stream after the forecast period. In several contexts, DCF valuation is referred to as the "income approach".

For appraisal purposes I selected two different valuation approaches: Discounted Cash Flow (DCF) method and Economic Value Added (EVA) method, and explained several reasons behind choosing DCF and EVA. Moreover, in this work other valuation methodologies ar. Moreover, in this work other valuation methodologies are discussed. In addition, it is worth noticing that in this document terms the Case Company, the Company, the Client or the Firm would sometimes be used instead of the actual name of the Company.

Guide to Discounted Cash Flow Valuation analysis. Here we discuss the 7 step approach to build a DCF model of Alibaba including projections. Having estimated the free cash flows for the next five years, we have to figure out the worth of these cash flows in the present time

Guide to Discounted Cash Flow Valuation analysis. Having estimated the free cash flows for the next five years, we have to figure out the worth of these cash flows in the present time. However, to get to know the present value of these future cash flow, we would require a discount rate that can be used to determine the net present value or NPV of these future cash flow. DCF Step 3- Calculating the Discount Rate. The third step in Discounted Cash Flow valuation Analysis is to calculate the Discount Rate. A number of methods are being used to calculate the discount rate.

The valuation of cash flow forecasts: An empirical analysis.

Economic Value Added (EVA). Home Resources Knowledge Valuation Economic Value Added (EVA). What is Economic Value Added?

Bachelor Thesis from the year 2003 in the subject Business economics - Investment and Finance, grade: 1,3 (A), Northumbria University (Newcastle Business School), language: English, abstract: This study investigates the underlying theories and assumptions of two modern capital market-based valuation approaches, the Discounted-Cash-Flow (DCF) and the Economic-Value-Added (EVA) approach, which are nowadays applied principally for industrial and manufacturing firms. This general examination is then transferred into a more specific investigation exploring whether these valuation concepts can be applied to the strongly regulated and more specific field of bank valuation. A questionnaire addressing bank analysts was created to analyse this question. The project indicates that the ideas of shareholder value which have been enforced over the last decade have implemented the need for a more shareholder-focused valuation. The application of DCF is basically attributed to this movement. It is revealed that this concept uses cash flow streams which depict a more realistic picture of an organization's true earning power. Moreover, it employs a discount rate based on the capital market and thus reflecting the yield expectations of the investors. EVA, on the other hand is a relatively new concept, copyrighted in 1994 by Stern Stewart. It highlights an organization's true economic profits. The study examines its components NOPAT, Capital and Cost of Capital, establishes a relation to DCF, points out some general limitations due to the fact that it falls back on accounting figures and critically assesses its dependence on the CAPM whose inherent assumptions of efficient markets that are not transferable into reality, might affect the valuation. The primary research undertaken finally reveals that the concepts of DCF and EVA are basically suitable to be applied to the valuation of banks. However, there are some peculiarities, primarily due to difficulties associated with the
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