Advantages and limitations of the discounted cash flow to firm valuation

Vlaović-Begović, Sanja; Momčilović, Mirela; Jovin, Slobodanka

doi:10.5937/skolbiz1301038v

Cited by 9 publications

(3 citation statements)

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“…Valuation of Shares in the Coal Mining Industry shows the results of under value to market prices (Magdalena, 2012) the valuation methods used were free cash flow to equity, abnormal earnings and relative valuation. Free Cash Flow To Equity (FCFE) Valuation Method is very appropriate to use in companies with known financial source structures such as banking (Vlaovic-Begovic et al, 2013). The advantage is in the detailed design of the balance sheet and income statement which include all future inflows and outflows of funds then the 208 http://journal.uinjkt.ac.id/index.php/esensi DOI: https://doi.org/10.15408/ess.v10i2.18857 projected balance is largely brought to real future balances.…”

Section: Introductionmentioning

confidence: 99%

Stock Valuation Analysis of Islamic Bank in Related to Forming Holding

Kacaribu

2021

Esensi

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This study aims to estimate the fair value of equity per share and to analyze undervalued or overvalued value of the company PT. Bank BRI Syariah Tbk. Result on this study combine market approach, book value approach and discount of future cash flow approach, so it can deliver comprehensive result. On the other side, this study or valuation specialize on financial industry due to uniqueness and complexity of the industry. PT. Bnk BRI Syariah Tbk was chosen, because of the plan ot the ministry of state-owned enterprises of the Republic of Indonesia to merge 3 sharia banks such as PT Bank BRI Syariah Tbk, PT Bank Syariah Mandiri, and PT Bank BNI Syariah. Only, PT Bank BRI Syariah is public company. This research is a descriptive analysis, the data and information used are secondary data from PT Bank BRI Syariah Tbk through its annual report, while other data used come from data and reports from other supporting institutions. This study uses three methods to value the share, free cash flow to equity, relative valuation, and abnormal earning. The conclusion is fair value of PT Bank BRI Syariah Tbk is IDR 482.47, so the value is undervalued.

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Section: Introductionmentioning

confidence: 99%

Stock Valuation Analysis of Islamic Bank in Related to Forming Holding

Kacaribu

2021

Esensi

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“…Given this context, the decision rule of the traditional net present value (NPV) analysis is to undertake the investment immediately if the NPV is positive and reject those with a negative NPV, regardless of how future uncertainties will unfold [8]. However, this method ignores the real options in an irreversible distribution network investment, such as the options to defer, expand, contract and abandon.…”

Section: Introductionmentioning

confidence: 99%

Multi-stage compound real options valuation in residential PV-Battery investment

Swandi

Chapman

et al. 2020

Energy

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Strategic valuation of efficient and well-timed network investments under uncertain electricity market environment has become increasingly challenging, because there generally exist multiple interacting options in these investments, and failing to systematically consider these options can lead to decisions that undervalue the investment. In our work, a real options valuation (ROV) framework is proposed to determine the optimal strategy for executing multiple interacting options within a distribution network investment, to mitigate the risk of financial losses in the presence of future uncertainties. To demonstrate the characteristics of the proposed framework, we determine the optimal strategy to economically justify the investment in residential PV-battery systems for additional grid supply during peak demand periods. The options to defer, and then expand, are considered as multi-stage compound options, since the option to expand is a subsequent option of the former. These options are valued via the least squares Monte Carlo method, incorporating uncertainty over growing power demand, varying diesel fuel price, and the declining cost of PV-battery technology as random variables. Finally, a sensitivity analysis is performed to demonstrate how the proposed framework responds to uncertain events. The proposed framework shows that executing the interacting options at the optimal timing increases the investment value.

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“…Th e abovementioned papers deal with contemporary issues of cash fl ows and cash fl ow statements within the international framework Authors from our region are increasing their focus on this subject. Vlaović et al [10] have analysed the eff ect of discounted cash fl ows on the company market value. Cash fl ow classifi cation and dilemmas on both domestic and international markets was the subject of research by Stevanović [11].…”

Section: Introductionmentioning

confidence: 99%