VFS3e Barton, 3e

ISBN: 0000000000000 | Copyright 2023

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Chapter One: The Link between Valuation and Financial Statement Analysis (pg. 1.1)
Why Valuation? (pg. 1.1)
Use of Accounting Data for Valuation (pg. 1.3)
Why Use Accounting-Based Valuation Models? (pg. 1.4)
Focusing on Operations (pg. 1.6)
Organization (pg. 1.7)
Understanding the Business and the Business Environment (pg. 1.9)
Summary (pg. 1.16)
Questions (pg. 1.17)
Multiple Choice (pg. 1.17)
Mini-Exercises (pg. 1.19)
Exercises (pg. 1.19)
Continuing Examples (pg. 1.20)
Chapter Two: Role of Accounting (pg. 2.1)
Understanding the Relation between Accounting Earnings and Free Cash Flows (pg. 2.1)
Operating Versus Financial Activities (pg. 2.4)
Formalizing the Relation between Free Cash Flows and Accounting Numbers (pg. 2.7)
Demonstrations of the Relation between Free Cash Flows and Accounting Numbers (pg. 2.10)
The Statement of Cash Flows (pg. 2.12)
Summary (pg. 2.13)
Appendix 2A: Financial Statement Articulation and Free Cash Flows (pg. 2.13)
Articulation of Financial Statements (pg. 2.13)
Connection to Free Cash Flows via Reformulation (pg. 2.14)
Questions (pg. 2.16)
Multiple Choice (pg. 2.16)
Mini-Exercises (pg. 2.18)
Exercises (pg. 2.19)
Problems (pg. 2.21)
Continuing Examples (pg. 2.21)
Chapter Three: Reformulation to Identify Operating Activities (pg. 3.1)
Separation of Operating and Financial Activities (pg. 3.1)
The Starting Point: Identifying Operating Income and Assets, NOPAT and NOA (pg. 3.2)
Identifying Net Operating Assets, NOA (pg. 3.7)
Classifying Balance Sheet Items as Operating or Financial (pg. 3.9)
The Equity Section of the Balance Sheet (pg. 3.13)
Identifying Net Operating Profitability after Tax, NOPAT (pg. 3.15)
Deciding if Income Items are Operating or Financial (pg. 3.17)
Financial Statement Linkages (pg. 3.23)
Summary (pg. 3.25)
Appendix 3A: A Detailed Example of Effects of Classification as Operating versus Financial Activitie (pg. 3.26)
Introduction (pg. 3.26)
Classification as Enterprise Operations versus Financial Activities (pg. 3.26)
Calculation of Enterprise Operating Free Cash Flow (FCF) (pg. 3.27)
Detailed Numerical Example of Effects of Classification of Financial Assets as Enterprise Operations (pg. 3.29)
Deciding between the Mingled and Separated Approaches to Classification (pg. 3.35)
Appendix Summary (pg. 3.35)
Appendix References (pg. 3.36)
Questions (pg. 3.37)
Multiple Choice (pg. 3.37)
Mini-Exercises (pg. 3.39)
Exercises (pg. 3.40)
Continuing Examples (pg. 3.49)
Chapter Four: Use of Additional Information to Enhance Reformulation (pg. 4.1)
Additional Information Related to KOOPER TIRE & RUBBER’S Balance Sheet (pg. 4.5)
Information on Pension and Other Postretirement Benefits (pg. 4.9)
Additional Information Related to KOOPER TIRE & RUBBER’S Income Statement (pg. 4.11)
More Information on Pension and Postretirement Benefits OTHER THAN PENSIONS (pg. 4.12)
Appropriate Tax Rate Assumption for Reformulating KOOPER TIRE & RUBBER (pg. 4.13)
Estimating the Cost of Debt Capital For Kooper Tire & Rubber (pg. 4.14)
Summary (pg. 4.16)
Appendix 4A: Detail on Incorporation of Additional Information (pg. 4.16)
Multiple Choice (pg. 4.26)
Mini-Exercises (pg. 4.29)
Exercises (pg. 4.33)
Problems (pg. 4.37)
Chapter Five: Adjusting Accounting Information (pg. 5.1)
The Effect of Accounting Method Choices on Valuation Models (pg. 5.1)
Adjustment A: Inventory Method (pg. 5.3)
Example 1: ConocoPhillips and HollyFrontier (pg. 5.4)
Example 2: General Mills (pg. 5.5)
Adjustment B: Operating Leases (pg. 5.7)
Classification of Leases and the Financial Statement Effects (pg. 5.7)
The Economics of Leases (pg. 5.9)
Determining the Lease Standard Used (pg. 5.9)
Example 1: Operating Lease Adjustments for Delta Air Lines (DAL) (pg. 5.11)
Adjustment C: Special-Purpose Entities (pg. 5.17)
Adjustment D: Share-Based Compensation (pg. 5.19)
Analyzing and Adjusting for Share-Based Compensation (pg. 5.21)
Summary of SBC Adjustments (pg. 5.25)
Reformulation Updated for Additional Information and Adjustments (pg. 5.27)
Summary (pg. 5.30)
Appendix 5A: Examples of Accounting for Share-Based Compensation (pg. 5.34)
Multiple Choice (pg. 5.36)
Mini-Exercises (pg. 5.40)
Exercises (pg. 5.41)
Problems (pg. 5.44)
Chapter Six: Analysis of Enterprise Operations (pg. 6.1)
Evaluating Sales Growth (pg. 6.2)
Evaluating Profitability of Operations (pg. 6.4)
Calculating Return on Net Operating Assets (pg. 6.4)
Disaggregating Return on Net Operating Assets (pg. 6.6)
Operating Profit Margin (pg. 6.6)
Operating Asset Turnover (pg. 6.8)
Trade-Off between Operating Profit Margin and Asset Turnover (pg. 6.10)
Evaluating Financial Activities (pg. 6.11)
Detailed Analysis of Operating Profit Margin (pg. 6.12)
Detailed Analysis of Operating Asset Turnover (pg. 6.13)
Understanding Profitability by Examining Other Companies (pg. 6.16)
Profitability Analysis (pg. 6.18)
Efficiency Analysis (pg. 6.19)
The Mapping from Return on Net Operating Assets to Return on Equity (pg. 6.22)
Advantages and Disadvantages of Equity Versus Debt Financing (pg. 6.23)
Summary (pg. 6.24)
Appendix 6A: Decomposition of Return on Equity (ROE) (pg. 6.24)
Appendix 6B: Informed Ratio Analysis (pg. 6.25)
Quick Ratio (pg. 6.25)
Daily Cash Expenditures (pg. 6.26)
Questions (pg. 6.27)
Multiple Choice (pg. 6.28)
MINI-Exercises (pg. 6.30)
Exercises (pg. 6.30)
Problems (pg. 6.33)
Chapter Seven: Full-Information Forecasting for Valuation (pg. 7.1)
Overview of the Forecasting Process (pg. 7.1)
The Roles of Sales Growth, PM, and ATO (pg. 7.3)
Limited-information Forecasting (pg. 7.4)
Compiling Limited-information Forecasts (pg. 7.8)
Introduction to Industry Analysis (pg. 7.8)
Moving from Limited-information to Full-Information Forecasting (pg. 7.9)
Full-Information Forecasts of Sales Growth (pg. 7.10)
Full-Information Forecasts of Operating Profit Margin (pg. 7.14)
Full-Information Forecasts of Operating Asset Turnover (pg. 7.18)
Preparing for Valuation (pg. 7.21)
Suspect Accounting (pg. 7.23)
Summary (pg. 7.24)
Multiple Choice (pg. 7.25)
MINI-Exercises (pg. 7.27)
Exercises (pg. 7.28)
PROBLEMs (pg. 7.31)
Chapter Eight: Market Multiple Valuation (pg. 8.1)
Use of Accounting Data in Market Multiples (pg. 8.1)
Calculating Market Multiples (pg. 8.3)
Steps to Using Market Multiples (pg. 8.4)
Implementing the Multiples Method for Valuing KOOPER TIRE & RUBBER (pg. 8.6)
Valuation Using an NOA Multiple (pg. 8.8)
Valuation Using a Book Value Multiple (pg. 8.9)
Price-to-Earnings Ratios Observed in Practice (pg. 8.11)
Valuation Using a NOPAT Multiple (pg. 8.12)
Valuation Using a Net Income Multiple (pg. 8.14)
Valuation Using Other Multiples (pg. 8.15)
Valuation Using Operating Forward Earnings and PEG Multiples (pg. 8.15)
Valuation Using Other Multiples, including Sales Multiples or Industry-Based Multiples (pg. 8.17)
Valuation Using a Sales Multiple (pg. 8.18)
Valuation Using the Ratio of (Price − Book) to R&D (pg. 8.19)
Consideration of EBITDA Multiples (pg. 8.19)
Combining Estimates from Differing Multiples (pg. 8.21)
The Product of a Multiples Valuation (pg. 8.22)
Perspective on Valuation Multiples and Fundamental Analysis (pg. 8.23)
Summary (pg. 8.24)
Questions (pg. 8.25)
Multiple Choice (pg. 8.25)
MINI-Exercises (pg. 8.27)
Exercises (pg. 8.27)