Sensitivity Analysis Accounting
Sensitivity Analysis Today I want to turn to sensitivity analysis. In other words, having set up our DCF and having completed all the inputs, now, let's push it around a little bit…
Decision criteria and free cash flow
Decision criteria and free cash flow Last time we applied our forecast drivers to our free cash flow formula to forecast free cash flows for our tablet project. Today I want to take…
Forecasting free cash flows
Forecasting free cash flows Today, I want to apply the forecast drivers to the free cash flow formula to forecast free cash flows into the future for the tablet project. Today…
Free Cash Flow Computation
Free Cash Flows Today I want to talk about free cash flows, a critical element in implementing any of those decision rules. Remember, there are two components to NPV. There are Free…
Forecast components of free cash flow
Components of free cash flow What I want to do in this lecture is talk about forecast drivers, or the assumptions required to forecast each component of the free cash flow formula…
Return on investment – ROI
Return on investment - ROI Today I want to talk about return on investment and in particular, what I want to discuss is the strengths and weaknesses of the internal rate of…
Term structure of interest rates
Term structure of interest rates Last time we talked about interest rates. In particular, we talked about how interest rates are quoted versus how interest rates are used to discount cash flows. We…
APR and EAR
In this topic, interest rates, I want to start off by talking about interest rate quoting conventions and I want to talk about how to compute the present value and future value…
Impact of inflation on time value of money
Impact of inflation on time value of money I want to talk about inflation and its impact on our real returns or our consumption. Let's get started. Hey, everybody. Welcome back to…
Why does money have a time unit?
Why does money have a time unit and why do we need to account for it? The answer is that there is an opportunity cost associated with not having money…
EVA a good measure of value creation
Is EVA a good measure of value creation? We have one more thing to do here, and that thing is let' s agree for just a minute that EVA is a good measure…
EVA Example
EVA Example But very simple example just to round up the idea of whether a company is creating or destroying value. Let us consider a company that is generating a NOPAT of…
What is EVA?
What is EVA or Economic value added? EVA or Economic Value Added is a measure of profitability. As a measure of profitability, it is just another way to calculate profits. Therefore, this…
Creating or Destroying Corporate Value
Creating or Destroying Corporate Value Two managerial mistakes that we tend to see a lot in practice, and believe it or not there's actually the both of them have been very widely…
Corporate Value Creation
Corporate Value Creation Corporate Value Creation is one of those two issues that are not only important and critical for all companies, but this is also related to that extremely critical variable that…