For example, tis model is useful for determining worth of a company’s shares or determining whether the investments expenses are justified. SA model represents all the economic profits that are generated by a business over and above the minimum return that is required by providers of capital. The “Value” is only added when the general net economic cash flow actually more than the economic costs of the capital employed in the production of the operating profit. Tis model integrates the key financial statements into a meaningful measure (Calomiris, 2007).
Te method is advantageous because it recognizes both the equity holder and debt financiers need for compensation for bearing risks. Te method also ensures that inequalities in compensation are leveled. I is also highly flexible and therefore is important in decision making. I is also applicable in performance monitoring, mrket valuation, cpital budgeting, ad output. Oher advantages include the greater accountability when investing new capital and other investments that are already in existence. Te external bodies and the government can apply appropriate benchmarks while evaluating the performance. O hand, te management will have a closer focus on the shareholder value maximizationWhile both the three methods listed above are effective in price determination, te stakeholder value added approach is much easy to use and is much more focused on the stakeholder as opposed dividend valuation model (Fama, &French, 1993, p.
Te management can consider the Gordon Model: tis model is quite useful, fr example, wen determining the price of stocks of a company. Asumption must be included such as current rate of growth for dividends 10.95%, te = and the ke is 13%.
A many companies try to leverage their growth and competitive advantages, te find home in mergers and acquisitions, hwever, mrgers and acquisition have inherent pitfalls that are faced by all partners in the engagement. Hwever, te only way to overcome these risks is through proper risk management. There are many factors behind the current trends towards growth through acquisition. Terefore, a this paper analyses the final rationale product segment and same industry, i will also analyze the methodology and framework of dealing the two financial and possible outcomes of the acquisitions.
Te dangerous gap encountered by major companies in. ..
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