| Corporate finance course | Evaluation in terms of returns |
 |
| Here, the value of the firm is not what it has but what it brings. Value = expected revenue/capitalisation rate It is not so easy to define the expected revenue. Is it the operating revenue after tax, the financial and operating revenue, the cash flows, the year profit, the distributed dividends... ? If we choose dividends, then V = d/(k-g). Here k is the rate for a safe investment (in long term government bonds for example. If we choose R for operating profit after tax or others, then V = R/i. R is the normal operating revenue for this company and i the occ (no risk interest rate + premium for the risk of this business). Then we can compare the return of a stock with the return of any other asset (ex: buildings, etc.) The goodwill >> |
|
Corporate finance PART ONE: CAPITAL EXPENDITURE PART TWO. BASICS OF FINANCE PART THREE FINANCING DECISIONS PART FOUR FINANCIAL MANAGEMENT Course created and updated by Dr David Chelly, PhD in Management sciences from the University of Tours.
|