金融经济学Valuation and shareholder value推荐.ppt

Valuation and Shareholder Value The Shareholder Value Approach Equity = Discounted dividends Why is the stock price (value) the discounted sum of the future cash flows (dividends)? Derivation The expected return on the stock is, by definition: Which, rearranged, gives: Derivation Dividends vs Cash Flows Free Cash Flow Value = sum of discounted expected free cash flows Definition: FCFt is the net cash flow received by all security holders of the firm together Cash flow to equity holders + cash flow to debt holders Or: FCF is the net cash flow generated by the firm’s invested capital Analysis of Free Cash Flows Free Cash Flow = Cash Inflow – cash outflow Cash Inflow = Sales x Operating Margin Cash Outflow = ? Fixed Assets + ?Working Capital + Taxes Cash Flow to Equity = FCF – Payments to debt-holders A view from the balance sheet Example – Sbux, balance sheet Example – Sbux, invested capital Example – Starbucks Formula Approach to valuation In a nutshell, FCF is: EBIT (1-T) – I, Where I is net investments (why?) Suppose a firm is not growing: Formula Approach to valuation If a firm invests It and makes a return of rt every year in the future, EBIT2 (1-T) = EBIT1 (1-T) + r1 I1 EBIT3 (1-T) = = EBIT2 (1-T) + r2 I2 = EBIT1 (1-T) + r1I1 + r2 I2 Formula Approach to valuation Each cash flow will look like: Formula Approach to valuation If we assume the firm always invests the same fraction of its earnings (K), and that it always makes the same yearly return on the investments (r), The formula above boils down to: Formula Approach to valuation Which again reduces to: You see that the firm is able to grow at a rate g = Kr in perpetuity (“sustainable growth rate”), resulting in Examples – Starbucks and BN Question What’s the best dividend policy for a company where ROIC WACC? Finite “supernormal” growth We can split the company’s future in two parts: A period with r k t (value-adding or “supernormal” growth) A second period with r = kt T