DOCSLIB.ORG

Finding Value When None Exists: Pitfalls in Using APV And

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Finding Value When None Exists: Pitfalls in Using APV And FINDING VALUE WHERE by Laurence Booth, NONE EXISTS: PITFALLS University of Toronto IN USING ADJUSTED PRESENT VALUE here are many different conceptually model could be used to examine interactions be- correct methods for valuing firms and tween the investment decision and the financing T projects. Perhaps the best known is the decision.1 This use of the M&M valuation framework weighted average cost of capital (WACC) has come to be called Adjusted Present Value (APV) approach, which involves discounting unlevered or the valuation-by-components method. The cen- (ie., pre-interest, but after-tax) cash flows at a rate tral idea is simply that the overall value of the firm that reflects a blend of the costs of the different can be unbundled into two separate components:its sources of finance. For example, the overall enter- debt-free or unlevered value and the value of its debt prise value can be calculated by discounting the tax shield. operating or unlevered cash flows to the firm as a Under normal simplifying assumptions, the whole at the firms weighted average cost of capital. WACC, FTE, and APV frameworks should all yield If desired, the firms equity value can then be the same answers if correctly implemented.2 But calculated by subtracting the value of the debt to the problem has always been interpreting what back out the equity value. Alternatively, the value correctly implemented means. The key issue is of the equity can be calculated directly by discount- in the assumption about the firms debt policy ing the cash flows to the equity holders at the equity that is, whether that policy is framed in terms of holders required rate of return. This latter approach maintaining a fixed debt ratio or a fixed dollar is commonly referred to as the flows to equity (FTE) amount of debt.3 This distinction has been picked method. Both the WACC and FTE frameworks have up by a number of researchers, who have demon- been in use for many years. strated the advantages of APV by focusing on In 1963, Franco Modigliani and Merton Miller highly-leveraged transactions (HLTs) like LBOs (M&M) first analyzed how corporate income taxes and leveraged recapitalizations.4 Some have even interact with a firms financing choices to create gone so far as to assert that using the weighted value. They showed that, under certain assumptions, average cost of capital (WACC) is obsolete...One the value of a firm with debt was equal to the value alternative, called adjusted present value, is espe- of the firm without debt plus the value of the tax cially versatile and reliable, and will replace shields from using tax-deductible debt financing. WACC as the DCF [discounted cash flow] method- Stewart Myers subsequently showed how the M&M ology of choice among generalists.5 1. S. Myers, Interactions of Corporate Financing and Investment Decisions - 4. I. Inselbag and H. Kaufold, How to Value Recapitalizations and Leveraged Implications for Capital Budgeting, Journal of Finance (March 1974), pp. 1-25. Buyouts, Journal of Applied Corporate Finance, Vol. 2 (Summer 1989), pp. 87-93; 2. R. Taggart, Capital Budgeting and the Financing Decision: An Exposition, idem, Two DCF Approaches for Valuing Companies under Alternative Financing Financial Management (Summer 1977), pp. 59-64. Strategies (and How to Choose Between Them), Journal of Applied Corporate 3. J. Miles and J. Ezzell, The Weighted Average Cost of Capital, Perfect Capital Finance, Vol. 10 (Spring 1997), pp. 114-122; E. Arzac, Valuation of Highly Markets and Project Life: A Clarification, Journal of Financial and Quantitative Leveraged Firms, Financial Analysts Journal (July/August 1996); and T. Luehrman, Analysis, Vol. 15 (September 1980), pp. 719-730; L. Booth, Capital Budgeting Using APV: A Better Tool for Valuing Operations, Harvard Business Review (May- Frameworks for the Multinational Corporation, Journal of International Business June 1997), pp. 2-10, (Fall 1982), pp. 113-123. 5. Luehrman (1997), cited above. 8 JOURNAL OF APPLIED CORPORATE FINANCE The goal of this paper is to examine the relative project or acquisition is similar to the firms existing advantages of these frameworks and offer guidance projects, so that the firm can use its current cost of as to when each is likely to be most useful. In this capital. In other words, business risk is held constant. respect this paper is similar to the recent paper by Isik In the WACC framework, the cost of capital captures Inselbag and Howard Kaufold that appeared in this the financing of the firm in the discount rate: journal.6 Unlike previous work, however, my focus is on how to implement the three valuation frame- E D K = K + K (1 − T ) works and on theproblems that are likely to arise in a e V d V actual applications. The key recommendation of this paper is to where K is the weighted average of the equity cost a caution against the use of APV: it is frequently K and the after-tax debt cost K (1 T), with the e d unreliable and should only be used in conjunction weights determined by the debt (D/V) and equity (E/ with more conventional valuation frameworks. In V) ratios based on market values. The critical as- particular, it only has general applicability in trans- sumption is that the firm estimates the debt and actions that involve a structured financing, like equity costs from current capital market data and leveraged buyouts (LBOs), project financing, and uses its optimal or target capital structure to deter- real estate financing. Even in these cases, however, mine the financing mix. its use depends on theoretical concepts that in Using the perpetuity formula, the overall enter- practical applications have a wide margin of error. prise (or project) value is simply THE CLASSIC VALUATION FRAMEWORK: EBIT(1 − T ) V = WACC K a There are several layers of difficulty in using We will illustrate how the methods differ in applica- valuation techniques, and sometimes hidden as- tions, so lets start with a firm (or project) with sumptions creep in. For this reason, we will start with expected EBIT of $20 million. If the firms tax rate is the simplest possible case, which is the standard 50%, the perpetuity free cash flows are $10 million. M&M perpetuity framework. The main assumptions With a target capital structure of 50% debt, and debt of this model will then be relaxed. But, as will and equity costs of 10% and 15%, respectively, then become clear, most of the insights of the M&M model K = 10%. In this case, the total enterprise value is a continue to hold in the more complicated frame- $100 million ($20mm × 50%/10%). works. At this point it is important to note the implicit To start out, the firm has a series of expected free assumption of the WACC approach. The perpetuity cash flows. These are estimated in the normal way formula uses the sum of an infinite series, with both as after-tax operating earnings, calculated as earn- the expected free cash flows and the discount rate ings before interest and taxes multiplied by one assumed to be constant (in addition to the normal minus the tax rate [EBIT × (1 T)], plus non-cash assumptions of constant tax rates, interest rates, and charges, minus changes in net working capital and business risk premiums). For the WACC to be capital expenditures. Since we are dealing with a constant, one of two assumptions must be made: perpetuity, the depreciation cash flows fund capital either debt financing has no impact on the WACC, expenditures and there are no net changes in which is the original M&M irrelevance argument;7 or working capital. As a result, the free cash flows are the debt ratio, and thus the financial risk, is constant simply the expected after-tax operating cash flows. through time. If debt financing affects the WACC and The next step is to determine a discount rate and the future debt ratio is expected to change, then the a valuation framework, which is where differences WACC will no longer be constant and thus techni- in extant approaches arise. Lets assume that the cally we cannot use the perpetuity formula.8 Of 6. Inselbag and Kaufold (1997), cited earlier. 8. There will still be a number that discounts the expected free cash flows and 7. See F. Modigliani and M. Miller, The Cost of Capital, Corporate Finance and gives the correct market value, but it will not be the current WACC. the Investment Decision, American Economic Review (June 1958), pp. 261-297; M. Miller, Debt and Taxes, Journal of Finance (May 1977), pp. 261-275. 9 VOLUME 15 NUMBER 1 SPRING 2002 course, temporary deviations from the optimal capi- of the acquisition itself, which belongs to the equity tal structure will occur over time. These deviations holders who own the project. In a fundamental do not invalidate the WACC approach, as long as sense, the financing follows from the valuation of the they are not expected at the time of the analysis. project or acquisitionafter it is acceptedand not Now lets consider how we implement the from its direct cost.10 In this way the frameworks for WACC approach. Suppose, for example, the free valuing a standard project or an acquisition are both cash flows in the example are from a project conceptually identical. requiring an initial investment of $60 million. In this Understanding how the debt decision is treated case, the projects net present value is $40 million in the WACC approach is critical for understanding ($100mm $60mm). For a standard project, this is all the differences between standard project valuation the operating manager needs to know: that the NPV and the valuation of stand-alone investments.
Load more

Recommended publications
  • Adjusted Present Value
    Adjusted Present Value A study on the properties, functioning and applicability of the adjusted present value company valuation model Author: Sebastian Ootjers BSc Student number: 0041823 Master: Industrial Engineering & Management Track: Financial Engineering & Management Date: September 26, 2007 Supervisors (University of Twente) ir. H. Kroon prof. dr. J. Bilderbeek Supervisors (KPMG) dr. J. Weimer drs. F. Siblesz Educational institution: University of Twente Department: FMBE Company: KPMG Corporate Finance ABCD Foreword This research report is the result of five months of research into the adjusted present value company valuation model. This master thesis serves as a final assignment to complete the Master Industrial Engineering & Management (Financial Engineering & Management Track). The research project was performed at KPMG Corporate Finance, located in Amstelveen, from May 21, 2007 up until September 28, 2007, under supervision of Jeroen Weimer (Partner KPMG Corporate Finance), Frank Siblesz (Manager KPMG Corporate Finance), Jan Bilderbeek (University of Twente) and Henk Kroon (University of Twente). The subject of this master assignment was chosen after deliberation with the supervisors at KPMG Corporate Finance on the research needs of KPMG Corporate Finance. It is implicitly assumed in this research report that the reader has been educated or is active in the field of corporate finance. It is also assumed that the reader is aware of existence of (company) valuation as part of the corporate finance working field. Any comments, questions or remarks that come forth from reading this research report can be directed to me through the contact information given below. The only thing remaining is to wish the reader a pleasant time reading this report and to hope that this report provides the reader with a clear insight in the adjusted present value model.
    [Show full text]
  • The Promise and Peril of Real Options
    1 The Promise and Peril of Real Options Aswath Damodaran Stern School of Business 44 West Fourth Street New York, NY 10012 [email protected] 2 Abstract In recent years, practitioners and academics have made the argument that traditional discounted cash flow models do a poor job of capturing the value of the options embedded in many corporate actions. They have noted that these options need to be not only considered explicitly and valued, but also that the value of these options can be substantial. In fact, many investments and acquisitions that would not be justifiable otherwise will be value enhancing, if the options embedded in them are considered. In this paper, we examine the merits of this argument. While it is certainly true that there are options embedded in many actions, we consider the conditions that have to be met for these options to have value. We also develop a series of applied examples, where we attempt to value these options and consider the effect on investment, financing and valuation decisions. 3 In finance, the discounted cash flow model operates as the basic framework for most analysis. In investment analysis, for instance, the conventional view is that the net present value of a project is the measure of the value that it will add to the firm taking it. Thus, investing in a positive (negative) net present value project will increase (decrease) value. In capital structure decisions, a financing mix that minimizes the cost of capital, without impairing operating cash flows, increases firm value and is therefore viewed as the optimal mix.
    [Show full text]
  • How Risky Is the Debt in Highly Leveraged Transactions?*
    Journal of Financial Economics 27 (1990) 215-24.5. North-Holland How risky is the debt in highly leveraged transactions?* Steven N. Kaplan University of Chicago, Chicago, IL 60637, USA Jeremy C. Stein Massachusetts Institute of Technology Cambridge, MA 02139, USA Received December 1989, final version received June 1990 This paper estimates the systematic risk of the debt in public leveraged recapitalizations. We calculate this risk as a function of the difference in systematic equity risk before and after the recapitalization. The increase in equity risk is surprisingly small after a recapitalization, ranging from 37% to 57%, depending on the estimation method. If total company risk is unchanged, the implied systematic risk of the post-recapitalization debt in twelve transactions averages 0.65. Alternatively, if the entire market-adjusted premium in the leveraged recapitalization represents a reduction in fixed costs, the implied systematic risk of this debt averages 0.40. 1. Introduction Highly leveraged transactions such as leveraged buyouts (LBOs) and lever- aged recapitalizations have grown explosively in number and size over the last several years. These transactions are largely financed with a combination of senior bank debt and subordinated lower-grade or ‘junk’ debt. Recently, the debt in these transactions has come under increasing scrutiny from investors, politicians, and academics. All three groups have asked in one way or another how risky leveraged buyout debt is in relation to the return it *Cedric Antosiewicz provided excellent research assistance. Paul Asquith, Douglas Diamond, Eugene Fama, Wayne Person, William Fruhan (the referee), Kenneth French, Robert Korajczyk, Richard Leftwich, Jeffrey Mackie-Mason, Merton Miller, Stewart Myers, Krishna Palepu, Richard Ruback (the editor), Andrei Shleifer, Robert Vishny, and seminar participants at the Securities and Exchange Commission, the University of Chicago, and MIT’s Sloan School made helpful comments on earlier drafts.
    [Show full text]
  • Paper-18: Business Valuation Management
    Group-IV : Paper-18 : Business Valuation Management [ December ¯ 2011 ] 33 Q. 20. X Ltd. is considering the proposal to acquire Y Ltd. and their financial information is given below : Particulars X Ltd. Y Ltd. No. of Equity shares 10,00,000 6,00,000 Market price per share (Rs.) 30 18 Market Capitalization (Rs.) 3,00,00,000 1,08,00,000 X Ltd. intend to pay Rs. 1,40,00,000 in cash for Y Ltd., if Y Ltd.’s market price reflects only its value as a separate entity. Calculate the cost of merger: (i) When merger is financed by cash (ii) When merger is financed by stock. Answer 20. (i) Cost of Merger, when Merger is Financed by Cash = (Cash - MVY) + (MVY - PVY) Where, MVY = Market value of Y Ltd. PVY = True/intrinsic value of Y Ltd. Then, = (1,40,00,000 – 1,08,00,000) + (1,08,00,000 – 1,08,00,000) = Rs. 32,00,000 If cost of merger becomes negative then shareholders of X Ltd. will get benefited by acquiring Y Ltd. in terms of market value. (ii) Cost of Merger when Merger is Financed by Exchange of Shares in X Ltd. to the shareholders of Y Ltd. Cost of merger = PVXY - PVY Where, PVXY = Value in X Ltd. that Y Ltd.’s shareholders get. Suppose X Ltd. agrees to exchange 5,00,000 shares in exchange of shares in Y Ltd., instead of payment in cash of Rs. 1,40,00,000. Then the cost of merger is calculated as below : = (5,00,000 × Rs.
    [Show full text]
  • Intra-Year Cash Flow Patterns: a Simple Solution for an Unnecessary Appraisal Error
    Intra-year Cash Flow Patterns: A Simple Solution for an Unnecessary Appraisal Error By C. Donald Wiggins (Professor of Accounting and Finance, the University of North Florida), B. Perry Woodside (Associate Professor of Finance, the College of Charleston), and Dilip D. Kare (Associate Professor of Accounting and Finance, the University of North Florida) The Journal of Real Estate Appraisal and Economics Winter 1991 Introduction The appraisal and academic communities have spent much time and effort in recent years developing and refining appraisal techniques to make them as theoretically correct and practically applicable as possible. As a result, income appraisal techniques such as discounted cash flow and capitalization of earnings are commonly used in the appraisal of income producing real property and closely held businesses. These techniques are theoretically sound and have become the primary valuation methods for many appraisers. However, the high degree of difficulty of forecasting future revenues, expenses, profits and cash flows result in some unavoidable application problems. Actual results almost always deviate from forecasts to some degree because of unforeseeable events and conditions, changing relationships between costs and revenues, changes in government policy and other factors. Many of these problems are unavoidable and the appraiser’s task is to limit errors as much as possible through analysis. Whatever their theoretical soundness, there is one error built into most appraisal tools as they are commonly applied. This error concerns the intra-year timing of cash flows and returns. Appraisal techniques such as capitalization of earnings, Ellwood formulae and discounted cash flow as they are most often applied inherently assume that income or cash flows occur at the end of each year.
    [Show full text]
  • Investment Appraisal: a Critical Review of the Adjusted Present Value (APV) Method from a South African Perspective
    Investment appraisal: A critical review of the adjusted present value (APV) method from a South African perspective APienaar Abstract Since first developed by S C Myers, the adjusted present value (APV) approach has gained wide recognition as an acceptable method of discounting cash flows. Although a number of assumptions have to be made, there is merit in using the APV method as an alternative to the NPV method of project appraisal. The purpose of this article is to evaluate the appropriateness of the APV method for investment appraisal purposes in the South African context. The major advantage of the APV method is that it separates the NPV rendered by the project if it were aU-equity financed, from the side-effects of financing. This allows the advantage of project­ specific financing to be taken into account in a very direct way when a project is evaluated, which is especially helpful when the weight or cost of financing differs from the rest of the company. Within the South African context, and specifically against the background of South African taxation legislation, certain principles underlying APV is questionable. The major point of critique is that the existence of the tax shield under South African taxation legislation is not proven. The second point of critique is that the different formulae used to determine the Ku, the cost of equity in an ungeared project, only render the same answer when the cost of debt is equal to the risk-free rate. In this regard a suggestion is made to adjust Ku for the premium on the risk-free rate in the case where the cost of debt exceeds the risk-free rate.
    [Show full text]
  • Net Present Value (NPV): the Basics & the Pitfalls
    Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com Net Present Value (NPV): The Basics & The Pitfalls Cobec Consulting Kevin Schutt, Manager Nathan Honsowetz, Consultant ICEAA Conference, June 2013 Agenda Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com 2 Time Value of Money Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com Discount Factor “A nearby penny is worth a distant dollar” ‐ Anonymous 3 Time Value of Money Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com Year 1 2 3 4 FV1 FV2 FV3 FV4 PV1 PV2 PV3 PV4 4 Inputs to NPV Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com 5 NPV Example Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com 6 Investment Alternatives Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com If NPV > 0 No correlation IRR > Cost of Capital Benefit/Cost > 1 7 Economic Analysis Regulations Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com 8 NPV in the Private Sector Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com 9 Net Present Value: The Pitfalls Presented at the 2013 ICEAA Professional Development & Training Workshop - www.iceaaonline.com Pitfall! Activision, 1982 10 NPV Pitfall #1: Formula error Presented at the 2013 ICEAA
    [Show full text]
  • Real Options
    1 CHAPTER 8 REAL OPTIONS The approaches that we have described in the last three chapters for assessing the effects of risk, for the most part, are focused on the negative effects of risk. Put another way, they are all focused on the downside of risk and they miss the opportunity component that provides the upside. The real options approach is the only one that gives prominence to the upside potential for risk, based on the argument that uncertainty can sometimes be a source of additional value, especially to those who are poised to take advantage of it. We begin this chapter by describing in very general terms the argument behind the real options approach, noting its foundations in two elements – the capacity of individuals or entities to learn from what is happening around them and their willingness and the ability to modify behavior based upon that learning. We then describe the various forms that real options can take in practice and how they can affect the way we assess the value of investments and our behavior. In the last section, we consider some of the potential pitfalls in using the real options argument and how it can be best incorporated into a portfolio of risk assessment tools. The Essence of Real Options To understand the basis of the real options argument and the reasons for its allure, it is easiest to go back to risk assessment tool that we unveiled in chapter 6 – decision trees. Consider a very simple example of a decision tree in figure 8.1: Figure 8.1: Simple Decision Tree p =1/2 $ 100 -$120 1-p =1/2 Given the equal probabilities of up and down movements, and the larger potential loss, the expected value for this investment is negative.
    [Show full text]
  • Financial Market Analysis (Fmax) Module 2
    Financial Market Analysis (FMAx) Module 2 Bond Pricing This training material is the property of the International Monetary Fund (IMF) and is intended for use in IMF Institute for Capacity Development (ICD) courses. Any reuse requires the permission of the ICD. The Relevance to You You might be… § An investor. § With an institution that is an investor. You may be managing a portfolio of foreign assets in a sovereign wealth fund or in a central bank. § With an institution that is in charge of issuing sovereign bonds. § With an institution that is a financial regulator. Defining a Bond – 1 A bond is a type of fixed income security. Its promise is to deliver known future cash flows. § Investor (bondholder) lends money (principal amount) to issuer for a defined period of time, at a variable or fixed interest rate § In return, bondholder is promised § Periodic coupon payments (most of the times paid semiannually); and/or § The bond’s principal (maturity value/par value/face value) at maturity. Defining a Bond – 2 Some bond have embedded options. § Callable Bond: The issuer can repurchase bond at a specific price before maturity. § Putable Bond: Bondholder can sell the issue back to the issuer at par value on designated dates (bond with a put option). Bondholder can change the maturity of the bond. Central Concept: Present Value The Present Value is… § The value calculated today of a series of expected cash flows discounted at a given interest rate. § Always less than or equal to the future value, because money has interest- earning potential: time value of money.
    [Show full text]
  • Study Guide Corporate Finance
    Study Guide Corporate Finance By A. J. Cataldo II, Ph.D., CPA, CMA About the Author A. J. Cataldo is currently a professor of accounting at West Chester University, in West Chester, Pennsylvania. He holds a bachelor degree in accounting/finance and a master of accounting degree from the University of Arizona. He earned a doctorate from the Virginia Polytechnic Institute and State University. He is a certified public accountant and a certified management accountant. He has worked in public accounting and as a government auditor and controller, and he has provided expert testimony in business litigation engage- ments. His publications include three Elsevier Science monographs, and his articles have appeared in Journal of Accountancy, National Tax Journal, Research in Accounting Regulation, Journal of Forensic Accounting, Accounting Historians Journal, and several others. He has also published in and served on editorial review boards for Institute of Management Accounting association journals, including Management Accounting, Strategic Finance, and Management Accounting Quarterly, since January 1990. All terms mentioned in this text that are known to be trademarks or service marks have been appropriately capitalized. Use of a term in this text should not be regarded as affecting the validity of any trademark or service mark. Copyright © 2015 by Penn Foster, Inc. All rights reserved. No part of the material protected by this copyright may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner. Requests for permission to make copies of any part of the work should be mailed to Copyright Permissions, Penn Foster, 925 Oak Street, Scranton, Pennsylvania 18515.
    [Show full text]
  • Net Present Value (NPV) Analysis
    PROGRAMME LIFECYCLE STRATEGIC PHASE DELIVERY PHASE INITIATION DEFINITION ESTABLISHMENT MANAGEMENT DELIVERY STAGE CLOSE STAGE STAGE STAGE STAGE PROGRAMME PROGRAMME PROGRAMME PROGRAMME FEASIBILITY DESIGN IMPLEMENTATION CLOSEOUT STAGE OBJECTIVES SCOPING PRIORITISATION OPTIMISATION NPV 1 NPV 2 Programme Prioritisation Net Present Value (NPV) analysis Helping our clients prioritise programmes and projects. By the Introduction of a Financial prioritisation model using NPV analysis What is NPV analysis? Where Does NPV analysis Fit into the Overall Programme Cycle? Net Present Value (NPV) is an effective front end management tool for a programme of works. It’s primary role The 1st NPV process is positioned at the front end of a capital is to confirm the Financial viability of an investment over a programme (NPV1 below). It allows for all projects within a long time period, by looking at net Discounted cash inflows programme to be ranked on their Net Present Values. Many and Discounted cash outflows that a project will generate organisations choose to use Financial ratio’s to help prioritise over its lifecycle and converting these into a single Net initiatives and investments. Present Value. (pvi present value index) for comparison. The 2nd NPV process takes place at the Feasibility stage of A positive NPV (profit) indicates that the Income generated a project where a decision has to be made over two or more by the investment exceeds the costs of the project. potential solutions to a requirement (NPV 2 below). For each option the NPV should be calculated and then used in the A negative NPV (loss) indicates that the whole life costs of evaluation of the solution decision.
    [Show full text]
  • FINANCIAL ANALYSIS a Controller’S Guide Second Edition
    ffirs.qxd 10/16/06 4:13 PM Page iii FINANCIAL ANALYSIS A Controller’s Guide Second Edition Steven M. Bragg John Wiley & Sons, Inc. ffirs.qxd 10/16/06 4:13 PM Page ii ffirs.qxd 10/16/06 4:13 PM Page i FINANCIAL ANALYSIS Second Edition ffirs.qxd 10/16/06 4:13 PM Page ii ffirs.qxd 10/16/06 4:13 PM Page iii FINANCIAL ANALYSIS A Controller’s Guide Second Edition Steven M. Bragg John Wiley & Sons, Inc. ffirs.qxd 10/16/06 4:13 PM Page iv This book is printed on acid-free paper. ࠗ∞ Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmit- ted in any form or by any means, electronic, mechanical, photocopying, recording, scan- ning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at www.copyright.com. Requests to the Publisher for per- mission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically dis- claim any implied warranties of merchantability or fitness for a particular purpose.
    [Show full text]