Stephen Penman Financial Statement Analysis And Security Valuation Pdf

stephen penman financial statement analysis and security valuation pdf

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Fundamental risk arises from the inherent risk in the business — from sales revenue falling or expenses rising unexpectedly, for example. Price risk is the risk of prices deviating from fundamental value. Prices are subject to fundamental risk, but can move away from fundamental value, irrespective of outcomes in the fundamentals. Chapter 19 elaborates and Figure A beta technology measures the risk of an investment and the required return that the risk requires.

The capital asset pricing model CAPM is a beta technology; is measures risk beta and the required return for the beta. An alpha technology involves techniques that identify mispriced stocks than can earn a return in excess of the required return an alpha return. See Box 1. The appendix to Chapter 3 elaborates on beta technologies. This statement is based on a statistical average from the historical data: The return on stocks in the U.

So, the argument goes, if one holds stocks long enough, one earns the higher return. However, it is dangerous making predictions from historical averages when risky investment is involved. Averages from the past are not guaranteed in the future.

After all, the equity premium is a reward for risk, and risk means that the investor can get hit with no guarantee of always getting a higher return. The investor who holds stocks for retirement, for example may well find that her stocks have fallen when she comes to liquidate them.

An investor who buys when prices are high or is forced to sell when prices are low may not receive the typical average return. A passive investor does not investigate the price at which he buys an investment. He assumes that the investment is fairly efficiently priced and that he will earn the normal return for the risk he takes on.

The active investor investigates whether the investment is efficiently. He looks for mispriced investments that can earn a return in excess of the normal return. This is not an easy question at this stage. It will be answered in full as the book proceeds. The firm has to repurchase the stock at the market price, so the shareholder will get the same price from the firm as from another investor.

Some argue that stock repurchases are indicative of good prospects for the firm that are not reflected in the market price, and firms repurchase stocks to signal these prospects. Firms buy stocks because they think the stock is cheap. Stocks would be efficiently priced at the agreed fundamental value and the market price would impound all the information that investors are using. Stock prices would change as new information arrived that revised the fundamental value.

But that new information would be unpredictable beforehand. With no one doing fundamental analysis, no one would have any idea of the real worth of stocks. However, there are deviations from 1. These deviations must either be mispricing in P that ultimately gets corrected so the ratio returns to 1.

A long position in the first case and a short position in the latter case would earned positive returns. Of course, this strategy is only as good as the V measure used to estimate intrinsic value. This illustrates price risk in investing see question C1.

In bubbles or periods of momentum investing, overpriced stocks get more overpriced, so taking a position in the hope that prices will return to fundamental value is risky. Exercises Drill Exercises E1.

Applications E1. Finding Information on the Internet: Dell Inc. The book value of debt is typically assumed to equal its market value, but financial statement footnotes give market value of debt to confirm this. The book value of equity is not a good indicator of its market value. The issue arises in the financial statement analysis in Part II of the book: Are debt assets part of operations or part of financing activities?

Debt is part of financing activities if it is held to absorb excess cash rather than used as a business asset. Put another way, HP is not in the business of trading debt, so the debt asset is not part of enterprise operations. Identifying Operating, Investing, and Financing Transactions a.

Mainly operations, but an observant student might point out that interest — that is a part of financing activities — affects taxes.

Chapter 10 shows how taxes are allocated between operating and financing activities. Minicases M1. Introduction This case can be used to outline how the analyst goes about a valuation and, specifically, to introduce pro forma analysis. It can also be used to stress the importance of strategy in valuation.

The case involves suspect analysis, so is pertinent to the question that will be answered as the book proceeds : What does a credible equity research report look like? The case can be introduced with the Apple example is Box 1. You may wish to recover the original Wall Street Journal April 26, piece on which this case is based and hand it out to students. It is available from Dow Jones News Retrieval. To value a stock, an analyst forecasts based on a scenario , and then converts the forecast to a valuation.

An analysis can thus be criticized on the basis of the forecasts that are made or on the way that value is inferred from the forecast. Students will question Alger's forecasts, but the point of the case is to question the way he inferred the value of AOL from his forecasts.

Students might quibble about the discount rate; the sensitivity of the value to different discount rates can be looked at. Use Box 1. There are two problems with the analysis: 1. The valuation is circular: the current price is based on an assumption about what the future price will be. Fundamental analysis is needed to break the circularity. What is "consistency" of earnings growth? What is an "excitement factor"? The valuation is done under one business strategy--that of AOL as a stand-alone, internet portal firm.

The analysis did not anticipate the Time Warner merger or any other alternative paths for the business. See box 1. To value an internet stock in , one needed a well-articulated story of how the "Internet revolution" would resolve itself, and what sort of company AOL would look like in the end.

Tenet 11 in Box 1. The ability of AOL to make acquisitions like its recent takeover of Netscape at the time will contribute to growth -- and Alger argued this. What if it pays too much for an overvalued internet firm?

What if it can buy assets like those of Time Warner cheaply because its stock is overpriced? This might justify buying AOL at a seemingly high price. Introduce the discussion on creating value by issuing shares in Chapter 3. The competitive landscape must be evaluated. Some argue that entry into internet commerce is easy and that competition will drive prices down. Consumers will benefit tremendously from the internet revolution, but producers will earn just a normal return.

The Alger Spectra fund was one of the top performing diversified stock funds of the s. See More. The active investor investigates whether the investment is efficiently 3 priced. Identifying Operating, Investing, and Financing Transactions a Financing b Operations c Operations; but advertising might be seen as investment in a brand-name asset d Financing e Financing f Operations g Investing.

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Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. Penman Published Economics. Save to Library. Create Alert.

Instructors: choose ebook for fast access or receive a print copy. Still Have Questions? Contact your Rep s. With the McGraw Hill eBook, students can access their digital textbook on the web or go offline via the ReadAnywhere app for phones or tablets. See tabs below to explore options and pricing. Don't forget, we accept financial aid and scholarship funds in the form of credit or debit cards. Product Description.

E-mail: shp38 columbia. The soft-cover international version is the same material but different cover , and much cheaper. Indeed, the course can be characterized as bringing accounting and finance together for business valuation. Students should have a good understanding of financial accounting principles, the balance sheet, income statement, and cash flow statement, the difference between cash accounting and accrual accounting, revenue recognition, and the calculation of basic accounting ratios. While the Financial Accounting core course provided an understanding of the principles and methods for the preparation of financial statements, this course focuses on the use of the financial statements, particularly for valuation. Students will see the accounting come to life as they apply it to valuation issues. From the Corporate Finance course, the student will bring an understanding of the time value of money.

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Быстро пришлите сюда людей. Да, да, прямо. К тому же у нас вышел из строя генератор. Я требую направить сюда всю энергию из внешних источников. Все системы должны заработать через пять минут. Грег Хейл убил одного из младших сотрудников лаборатории систем безопасности и взял в заложники моего старшего криптографа.

Но когда ТРАНСТЕКСТ расшифровал эти потоки информации, аналитики тут же увидели в них синхронизированный через Интернет отсчет времени. Устройства были обнаружены и удалены за целых три часа до намеченного срока взрыва. Сьюзан знала, что без ТРАНСТЕКСТА агентство беспомощно перед современным электронным терроризмом. Она взглянула на работающий монитор. Он по-прежнему показывал время, превышающее пятнадцать часов. Даже если файл Танкадо будет прочитан прямо сейчас, это все равно будет означать, что АНБ идет ко дну. С такими темпами шифровалка сумеет вскрывать не больше двух шифров в сутки.

Наверное, родители отправили ее сюда по какой-то школьной образовательной программе, снабдив кредитной карточкой Виза, а все кончилось тем, что она посреди ночи вкалывает себе в туалете наркотик. - Вы себя хорошо чувствуете? - спросил он, пятясь к двери. - Нормально, - высокомерно бросила.  - А тебе здесь делать нечего. Беккер повернулся, печально посмотрев в последний раз на ее руку.

Но более страшным стало то, что он увидел в следующее мгновение. Скрытые тенью, на него смотрели глаза Грега Хейла, глаза, полные ужаса. Тогда Стратмор понял, что Грег Хейл должен умереть.

Хейл появился в порядке возмещения ущерба. После фиаско Попрыгунчика. Четыре года назад конгресс, стремясь создать новый стандарт шифрования, поручил лучшим математикам страны, иными словами - сотрудникам АНБ, написать новый супералгоритм. Конгресс собирался принять закон, объявляющий этот новый алгоритм национальным стандартом, что должно было решить проблему несовместимости, с которой сталкивались корпорации, использующие разные алгоритмы. Конечно, просить АН Б приложить руку к совершенствованию системы общего пользования - это все равно что предложить приговоренному к смертной казни самому сколотить себе гроб.

 А то ты не знаешь. Беккер пожал плечами. Парень зашелся в истерическом хохоте. - Ну и. Но тебе там понравится.

Танкадо хотел спасти наш банк данных, - говорила она.  - А мы так и не узнаем, как это сделать. - Захватчики у ворот. Джабба взглянул на экран. - Вот и все! - По его лицу стекали ручейки пота.

Financial Statement Analysis and Security Valuation

То, что она увидела, казалось лишенным всякого смысла. 22: РУЧНОЕ ОТКЛЮЧЕНИЕ ГЛАВА 35 Беккер в шоке смотрел на Росио. - Вы продали кольцо.

Собрав все силы, Хейл, сильнее обхватив Сьюзан за талию, начал пятясь подниматься по лестнице. Она пыталась цепляться каблуками за ступеньки, чтобы помешать ему, но все было бесполезно. Он был гораздо сильнее, и ему легче было бы подталкивать ее вверх, тем более что площадка подсвечивалась мерцанием мониторов в кабинете Стратмора.

Так вот какова месть Танкадо. Уничтожение ТРАНСТЕКСТА. Уже несколько лет Танкадо пытался рассказать миру о ТРАНСТЕКСТЕ, но ему никто не хотел верить. Поэтому он решил уничтожить это чудовище в одиночку. Он до самой смерти боролся за то, во что верил, - за право личности на неприкосновенность частной жизни.

Черные атакующие линии начали исчезать. - Происходит восстановление! - кричал Джабба.  - Все становится на свои места.

Financial Statement Analysis and Security Valuation

У Бринкерхоффа подогнулись колени. Он не мог понять, почему Мидж всегда права. Он не заметил отражения, мелькнувшего за оконным стеклом рядом с. Крупная фигура возникла в дверях директорского кабинета. - Иису… - Слова застряли у Бринкерхоффа в глотке.

Он принял решение. Под визг покрышек, в снопе искр Беккер резко свернул вправо и съехал с дороги. Колеса мотоцикла подпрыгнули, ударившись о бетонное ограждение, так что он едва сумел сохранить равновесие.

 Самое разрушительное последствие - полное уничтожение всего банка данных, - продолжал Джабба, - но этот червь посложнее. Он стирает только те файлы, которые отвечают определенным параметрам. - Вы хотите сказать, что он не нападет на весь банк данных? - с надеждой спросил Бринкерхофф.  - Это ведь хорошо, правда.