cooperate finance

922 words 4 pages
Show More
GSBS6130- Corporate Finance
1. Introduction

Even though the operating performance of Innovative Chemical Corporation (ICC) has been outstanding, there are some problems in respect of the share price appreciation. Firstly, P/E ratio will be used to evaluate the company’s stock and factors which affect company’s P/E ratio will be listed. Furthermore, discounted dividend valuation model will be demonstrated and fundamental factors which impact the share pricing will be analysed. Finally, the value of ICC at 30 June 2010 will be calculated using P/E ratio and DDM model. Meantime, the weakness of those two models will be illustrated, and alternative methodology will be applied to calculate the intrinsic valuation of ICC and then compare …show more content…

b) If the stock does not currently pay a dividend, like many growth stocks, more general versions of the discounted dividend model must be used to value the stock. One common technique is to assume that the Miller-Modigliani hypothesis of dividend irrelevance is true, and therefore replace the stock’s dividend D with E earnings per share.
But this has the effect of double counting the earnings. The model's equation recognizes the trade-off between paying dividends and the growth realized by reinvested earnings. It incorporates both factors. By replacing the (lack of) dividend with earnings, and multiplying by the growth from those earnings, you double count. c) The Gordon model will result in the stock price which is sensitive to the growth rate chosen.
4 c alternative methodology and compare Using the PCF model, PCF ratio is the ratio between the share price and cash flow per share, which is used to evaluate the share price level and risk level. The ratio is smaller, the cash flow per share will increase, and the operating pressure is less. According to PCF ratio formula, we can find out the intrinsic value for ICC at 30 June in 2010 is $25.05519851 which is lower than the share price at the same time. We also can use internal rate of return model (IRR).
4. Conclusion
To sum up, the company has a lot of problems as above stated.
5. Appendix
Formula
P=D1/k-g or P=D0* (1+g)/k-g
P/E=share price/ EPS

Related

  • Blue Van Case Study
    2255 words | 10 pages

    relationship between the customer and the organisation 1 2.2 Measures Supershuttle May Take 2 3. Managing Information for Decision Making 3 3.1 The Demands Refer to Data Collection Methods 3 3.2 The Data are Necessary to Get 3 4. Managing Operational Finance 4 4.1Choose a Effective and Profitable Policy 4 4.2Franchise or Independent Operator 5 5. Managing Operations 5 5.1 Difficulities for Supershuttle 5 5.2 Suggestions for suppershuttle to plan and manage resources 6 References: 8 1. Introduction:….

    Show More
  • Business Plan
    7433 words | 30 pages

    Table of Content 1. Executive Summary1 2. Business Description3 3.1 Industry Description3 3.2 Business Structure4 3.3 Company Description4 3.4 Clients Description4 3.5 Service Description5 3.6.1 Wedding Service5 3.6.2 Experience Service6 3.6.3 Special Services6 3. Market Analysis8 4. Competitive Analysis12 5.6 The Strengths of Our Competitors12 5.7 The Strengths of Us13 5.8 The Weaknesses of Our Competitors13….

    Show More
  • Ikea's Global Sourcing Challenge: Indian Rugs
    1272 words | 6 pages

    The case “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)” is about IKEA’s development from a backyard company to one of the world’s largest furniture retailers, which has to deal with the issues of child labor and how they should behave considering economical issues and the company’s policy! Conclusions made in this study are only based on the facts given in the case, considering pros and cons of an action. How should Marianne Barner respond to the invitation for IKEA to have….

    Show More
  • Principle of Fairness in Political Obligations
    6567 words | 27 pages

    everyone who participates in a reasonably just, mutually beneficial cooperative practice — Hart's “joint enterprise according to rules” — has an obligation to bear a fair share of the burdens of the practice. This obligation is owed to the others who cooperate in the enterprise, for cooperation is what makes it possible for any individual to enjoy the benefits of the practice. Anyone who acts as a….

    Show More
  • Joint Commission
    1274 words | 6 pages

    The Joint Commission is a nonprofit organization that certifies more than 18,000 health care organization and programs throughout the world. Founded in 1951, the Joint Commission provides a national symbol of quality for health care as well as analyzes each organization’s commitment to meeting high quality performance standards. The Joint commission focuses on accrediting Acute Care Hospitals, ambulatory, behavior health, long term care, health care facilities, clinical laboratories, health care….

    Show More
  • Client Paper BSHS 305
    1169 words | 5 pages

    Client paper Name of student Name of tutor Course Institution’s name Date Client paper Understanding the needs, concerns and the attitudes of the clients is important on the part of the client human services providers, since it will help them to provide quality services to the clients. Some social, cultural, and personal factors do affect the provision of services to the clients. For a client to gain quality and satisfaction on the goods that are being provided by the service….

    Show More
  • Disney Theme Park to India
    3966 words | 16 pages

    Disney Theme Park to India Abstract: This report is aim to analyze profitable adventure of The Walt Disney Company to set up Disneyland theme park in India. As one of main emerging markets in Asia, India might be the next destination for The Walt Disney Company to target on. Therefore, this report uses a series of marketing tools to demonstrate the macro-environment and micro-environment in India, such as PESTEL, SWOT, Porter’s Five Forces Model and Self Referencing Criteria. Based on this analysis….

    Show More
  • Ratio Analysis for Microsoft Corp
    1774 words | 8 pages

    employees, directors, and executive officers must understand and comply with the Microsoft Standards. In ambiguous circumstances, they must request guidance to resolve the business practice or compliance concern. They are expected to be truthful and cooperate….

    Show More
  • Tesco Bank Marketing
    2826 words | 12 pages

    Contents 1. Executive Summary-----------------------------------------------------------------------1 2. Task 1 Area of Study----------------------------------------------------------------------2 3. Task 2 PLC Stage-------------------------------------------------------------------------2 4. Task 3 Target Market----------------------------------------------------------------------5 5. Task 4 Product repositioning------------------------------------------------------------6….

    Show More
  • Response to "A Learning Team Drama in One Act"
    1587 words | 7 pages

    think the primary reason why this learning team is falling apart is because each member in the learning team has significant behavioral patterns. These behavioral patterns have negative effects on the team. They are the reason why the members cannot cooperate effectively as a team. Timothy Jones is a 28-year-old Texan who works in the energy sector. From the way he talks to Hee Soep Choi, we can tell that he is discriminated against international student. The horrible terrorist attack of September….

    Show More

Popular Essays