标题: Reading 44: Market-Based Valuation: Price and Enterprise Val [打印本页]
作者: 土豆妮 时间: 2011-3-18 15:39 标题: [2011]Session 12-Reading 44: Market-Based Valuation: Price and Enterprise Val
Session 12: Equity Investments: Valuation Models
Reading 44: Market-Based Valuation: Price and Enterprise Value Multiples
LOS h: Discuss the fundamental factors that influence alternative price multiples and dividend yield.
An increase in which of the following variables will least likley result in a corresponding increase in the price-to-book valuePBV ratio for a high-growth firm?
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B) |
Growth rates in earnings. | |
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C) |
Required rate of return | |
The PBV ratio decreases as the required rate of return increases.
[此贴子已经被作者于2011-3-21 11:33:34编辑过]
作者: 土豆妮 时间: 2011-3-18 15:40
An increase in growth will cause a price-to-earnings (P/E) multiple to:
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A) |
there is insufficient information to tell. | |
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An increase in growth will decrease the denominator and increase the numerator in the trailing P/E expression, both of which should increase the P/E ratio:
P0/E0 = [(1 – b)(1 + g)] / (r – g)
Note that the reading does not allow for any interactive relationship between retention and growth. Thus, no explicit consideration is given to how the growth increase was generated.
作者: 土豆妮 时间: 2011-3-18 15:40
An increase in financial leverage will cause a price-to-earnings (P/E) multiple to:
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C) |
there is insufficient information to tell. | |
An increase in financial leverage will cause the required rate of return to increase, thereby decreasing the P/E. This is clear in the expression for trailing P/E:
P0 / E0 = [(1 – b)(1 + g)] / (r – g)
(Note: the reading does not allow for any interactive relationship between leverage, return on equity (ROE), and growth. Thus, no explicit consideration is given to whether the increase in leverage would increase ROE and therefore growth through the g = (ROE × retention) relationship.)
作者: 土豆妮 时间: 2011-3-18 15:40
An increase in financial leverage, assuming no change in the growth rate, will generally cause a price to cash flow (P/CF) ratio to:
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A) |
there is insufficient information to tell. | |
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An increase in financial leverage should increase the firm’s risk and consequently its required rate of return. This should decrease the P/CF ratio, as indicated by the following expression:
P0 / CF0 = (1 + g) / (r – g)
(Note: the reading does not allow for any interactive relationship between leverage and growth. Thus, no explicit consideration is given to whether the increase in leverage would increase return on equity (ROE) and therefore growth through the g = (ROE × retention) relationship.)
作者: 土豆妮 时间: 2011-3-18 15:40
An increase in return on equity (ROE) will cause a price-to-book (P/B) multiple to:
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C) |
there is insufficient information to tell. | |
An increase in ROE should increase the price to book (P/B) ratio:
P0 / B0 = (ROE – g) / (r – g)
作者: 土豆妮 时间: 2011-3-18 15:41
All other variables held constant, the justified price-to-book multiple will decrease with a decrease in:
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B) |
required rate of return. | |
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All other variables held constant, a decrease in expected growth rate will result in a decrease in the justified price-to-book multiple.
作者: 土豆妮 时间: 2011-3-18 15:41
A decrease in the earnings retention rate will cause a price-to-sales (P/S) multiple to:
A decrease in the earnings retention rate will increase the following expression for P/S due to the implied increase in the payout ratio, which is (1 – b):
P0 / S0 = [(E0 / S0)(1 – b)(1 + g)] / (r – g)
Note that the reading does not allow for any interactive relationship between retention and growth. Thus, no explicit consideration is given to whether the increase in the payout ratio will cause an offsetting decrease in growth.
作者: 土豆妮 时间: 2011-3-18 15:41
An increase in growth will cause a price to cash flow multiple to:
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C) |
there is insufficient information to tell. | |
An increase in growth increases the price to cash flow ratio (CF), as indicated by the following expression:
P0 / CF0 = (1 + g) / (r – g)
作者: 土豆妮 时间: 2011-3-18 15:41
The net impact of an increase in payout ratio on price-to-book value (PBV) ratio cannot be determined because it might also:
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A) |
decrease expected growth. | |
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B) |
decrease the market value of the firm. | |
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C) |
decrease required rate of return. | |
If payout increases, the growth of the firm may slow down, because internally generated funds are not being invested in new, profitable projects. Hence, the net impact on the PBV ratio from change in payout ratio cannot be determined.
作者: 土豆妮 时间: 2011-3-18 15:41
The price-to-book value (PBV) ratio for a high-growth firm will:
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A) |
increase as the growth rate in either the high-growth or stable-growth period decreases. | |
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B) |
increase as the growth rate in the high-growth period increases and decrease as the growth rate in the stable-growth period increases. | |
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C) |
increase as the growth rate in either the high-growth or stable-growth period increases. | |
The PBV ratio for a high-growth firm will be determined by growth rates in earnings in both the high-growth and stable-growth periods. The PBV ratio increases as the growth rate increases in either period.
作者: 土豆妮 时间: 2011-3-18 15:42
An increase in return on equity (ROE) will cause a price-to-earnings (P/E) multiple to:
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A) |
there is insufficient information to tell. | |
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An increase in ROE will increase growth through the g = (ROE × retention) relation. Thus, as growth increases, the following expression for trailing P/E should increase:
P0/E0 = [(1 – b)(1 + g)] / (r – g)
Note that the reading does not allow for any interactive relationship between leverage, ROE, and growth. Thus, no explicit consideration is given to whether the increase in ROE results from risk-increasing leverage that could cause an offsetting increase in the required rate of return.
作者: 土豆妮 时间: 2011-3-18 15:42
An increase in profit margin will cause a price-to-sales (P/S) multiple to increase if:
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A) |
the required rate of return increases. | |
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B) |
the growth rate in sales does not decrease proportionately. | |
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C) |
there is insufficient information to tell. | |
An increase (decrease) in the profit margin increases (decreases) the growth rate if sales do not decrease (increase) proportionately. Increases in the required rate of return or leverage would decrease the P/S ratio. This is clear in the expression for trailing P/S:
P0 / S0 = [(E0 / S0)(1 – b)(1 + g)] / (r – g)
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