How is it that the Residual earnings model can be used in place of the cash flow model to value returns when cash flows are negative?作者: stockjaguar 时间: 2013-4-28 10:28
Accounting recognition.
Say you buy some equipment for $1000 that will be depreciated for 4 years. At the same time you have income of $750 every year. You’d have something that looks simlar to this.
Year NI FCF
2013 500 -250
2014 500 750
2015 500 750
2016 500 750作者: marsilni 时间: 2013-4-28 10:28
Because in the RI model most of the value comes from the beginnig Book Value
