Financial Analysis and Valuation – Opportunities and Challenges by Dr Shantha P Yahanpath Director, Agape International and Lecturer at Sydney Business School Australia
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Financial Analysis and Valuation – Opportunities and Challenges
byDr Shantha P YahanpathDirector, Agape International and Lecturer at Sydney Business
SchoolAustralia
Key issues Forecasting or guessing Historical background Development of theory Efficacy of models Practical relevance Paradigm shift and velocity of Change Future opportunities
Forecasting or guessing
A child was asked what her future profession would be…and she replied…my future profession is not here today…it is not known to us today but it will be there when I get there
Historical background Constant growth models Variable growth models CAPM - M Miller, Sharp, Lintner, Black and
Scholes Price:earnings models Cashflow models Asset-based models Experience based models
Forecasting involves:
Estimation Guessing Based on information available at the
time of forecasting
Theoretical issues Mathematical complexity by-passing
plausibility Crude assumptions distorting the value of
inputs Difficulty in valuing intangible assets like HR
resources eg. managerial talent, brand value Valuing corporate activity eg. M&A Impact of future competition
Efficacy of models depends on: Theoretical plausibility Explanatory ability Practical relevance Accuracy of parameter estimates Forecasting ability Simplicity
Practical relevance - accuracy Spread of valuation ranges Technological developments Changing business paradigms -
velocity of change Valuation of knowledge Effect of assumptions
Paradigm Shift – Intellectual capital rules Soil to steel and steel to software - agriculture
to manufacturing and manufacturing to information technology
Brains matter more than brawn - how much you know maters more than how much you can lift
Innovation matters more than mass production – a product’s value is measured not in kilos but by the weight of ideas that went into making it
Information matters most of all – how easily it can travel through the economy and how well it is used
Opportunities
Participation of multi-disciplinary teams Problem oriented research Re-visit the past Challenge to academia - bring back relevance Invest more effort in alternative forecasting
and Bayesian approach Appropriate models for small businesses
Velocity of change – enemy or friend?
Some models were developed during “industrialisation”
Such models have been “creatively destructed” - models have gone past their use by date
http://www.forbes.com/sites/jimblasingame/2012/10/08/managing-the-velocity-of-change/
http://www.ey.com/Publication/vwLUAssets/EY_CIO_-_The_velocity_of_change/$FILE/EY-CIO-The-velocity-of-change.pdf
Company ValuationsIs future past?
Back to Basics? Are we back to judgemental approach?
Related Documents
