Valuation of a Company using Time Series Analysis

Pohl, Philipp

doi:10.1515/jbvela-2015-0004

Cited by 3 publications

(2 citation statements)

References 13 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In line with this definition, distress arises "when the total liabilities exceed a fair valuation of the firm's assets with value determined by the earning power of the assets" (see Altman, 1968). The business value is often described in terms of the discounted cash-flow method, in which the business value is given by the present value of free cash flow (see, for example, Pohl, 2017).…”

Section: An Overview Of Distress Predictorsmentioning

confidence: 99%

Cash Flows Indicators in the Prediction of Financial Distress

Karas

Režňáková

2020

View full text Add to dashboard Cite

We argue that the conventional approach to bankruptcy modelling, which relies on accrual-based ratios, is vulnerable to the earnings management of a company threatened by insolvency. This fact may pose significant limits on the possibilities of distress prediction. Business distress is defined as cashflow insufficiency, and cashflow indicators are less vulnerable to earnings management. For these reasons we assume that cashflow ratios are theoretically more suitable for predicting distress. In our research we analysed the usefulness of cashflow-based ratios as potential predictors of bankruptcy. During the research, the cashflow-based ratios take the form of many variants of operating, financial, investment and free cashflow into a firm in combination with total assets, sales, liabilities and other indicators. The research was carried out on a sample of 4,350 Czech manufacturing SMEs operating during the period between 2013 and 2018. We employ the previously published approach of hybrid modelling to create the prediction model, though we propose a modification for the purposes of this paper. The modified hybrid model employs Classification and Regression Trees and Logistic Regression, while we use the Principal Component Analysis method to deal with the problem of multicollinearity. The results showed that operating cashflow ratios play a significant role in financial distress, especially when combined with short-term debts.

show abstract

Section: An Overview Of Distress Predictorsmentioning

confidence: 99%

Cash Flows Indicators in the Prediction of Financial Distress

Karas

Režňáková

2020

View full text Add to dashboard Cite

show abstract

“…In another opinion says that investors as providers of funds need to assess the due diligence of the companies they will invest. Also, investors expect a profitable product and an attractive ratio of income to equity, which makes management have to manage the source of the surplus successfully and sustainably (Pohl, 2017) The author chooses the DCF method as company valuation and compares it with similar businesses. Then do a sensitivity analysis on the feasibility of investing in this company.…”

Section: Business Issuementioning

confidence: 99%

Valuation Business in Peer to Peer Lending With Discounted Cash Flow (Dcf) Method

Hakim

Rahadi

Adrianza³

2020

AIJBAF

View full text Add to dashboard Cite

Start-up companies are businesses that are now very popular in Indonesia. To support the business moving fast, these businesses need investors by offering the company's fair value. With similar but not the same calculation, in which start-up companies have different financial indicators and financial assumptions with conventional companies, in this case, the valuation is included innovation value and disruption probability. This research is a descriptive study which is based on case studies in the research object. The object of research is PT ABC, a company engaged in the field of Financial Technology. Data collection is done by collecting secondary data from the company and observation during the internship. The analysis is done by conducting a sensitivity analysis with the DCF method using Microsoft Excel. Valuation is also very closely related to Financial Projection to predict the state of the industry pear to pear landing in the future. The data shows that the enterprise value is Rp. 46,084,735,403,742. Then, EV/Revenue is 1,748 times, and the percentage of raise is 100%. According to DCF Valuation, the author suggests investors invest in the company. Because the valuation is very good.

show abstract

The indirect verification of the going concern assumption by analysing the threat of bankruptcy

Karas

Režňáková

2020

Management (Split, Online)

View full text Add to dashboard Cite

The generally accepted aim of doing business is to maximize the business value. The value of a business strongly depends on its ability to generate future cash flow for its owners. A necessary condition is that the business remains financially viable or in other words, the business should meet the assumption of going concern principle. Verifying such an assumption, however, remains an issue. We suggest that this could be indirectly verified as an absence of threat of imminent financial distress. For this purpose, we analysed a set of cash flow and profit based ratios along with a set of other ratios with a potential influence on the business value. In terms of sample, we focus on Czech manufacturing SMEs that were selected, due to their specific features resulting from the financial constraints. The F-test and t-test were employed as a method of identifying the typical signs of risk of financial distress or rather obstacles in accepting the going concern principle. We found that only four of the analysed ratios could serve effectively for this purpose. The best results were achieved when employing ratios describing the operational cash flow or short-term debt, where the gap between viable business and those with limited prospects is the widest.

show abstract

Valuation of a Company using Time Series Analysis

Cited by 3 publications

References 13 publications

Cash Flows Indicators in the Prediction of Financial Distress

Cash Flows Indicators in the Prediction of Financial Distress

Valuation Business in Peer to Peer Lending With Discounted Cash Flow (Dcf) Method

The indirect verification of the going concern assumption by analysing the threat of bankruptcy

Contact Info

Product

Resources

About