ñòð. 193 |

sources of value analysis, 338 decision tree flexibility valuation method, 509

staff turnover reduction example, 553 reverse engineering flexibility valuation

stage gate processes method, 515

basic concept, 113

depot example, 113 T bill

flexibility valuation (aid to), 487 basic description, 29

flexibility valuation link, 480 rate over time, 400

optimisation of projects, 199, 200 risk-free rate, 400

Sources of Value implementation map, 292 tail

Standard & Poorâ€™s, 36, 165 distribution (tail thereof), 176

Standard & Poorâ€™s credit rating scale, 36 industry cost curve (tail thereof), 276

standard deviation (portfolio effect), 161 valuation of, 502

standard methodology, see economic modelling target setting

basic principles, 252 appropriate targets, 112

suggested wording, 253â€“57 behavioural impact, 111

624 Index

Tata Steel (bid for Corus) value profile

introduction to, 88 basic concept, 14, 137

synergies, 371 Fence Treatment Inc example, 137

valuation of Corus, 370 growth (of value over time), 138

tax simple example (two year project), 377

calculation method, 80 value proxies, 383

inflation (effect of), 224 value return

pre- or post-tax CoC, 454 basic concept, 137

rates over time, 405 plans return the cost of capital, 377

relief on interest, 84, 94 variable costs

residual value effect, 236 basic concept, 77

terminal value cost curves (component thereof), 274

basic concept, 135, 235 negative variable costs, 274

Fence Treatment Inc example, 136 sector attractiveness (impact thereon), 291

perpetuity valuation equation, 237 vision, 108

terminal value methods volatility

book value method, 364 basic concept, 161

funds flow to perpetuity method, 357 option value, effect on, 476

growth-adjusted profit method, 358

WACC (weighted average cost of capital), see also cost

life of asset method, 363

liquidation method, 365 of capital

list of methods, 357 basic description, 50

overview-adjusted profit method, 359 formula, 397

specified company life method, 363 winnerâ€™s curse, 325

sustainable return on capital method, 360 words and music

trading multiple method, 364 basic concept, 125

two-stage growth to perpetuity method, 361 CoC change example, 442

time value of money, see cost of capital consistency between IRR and ROCE, 129

top down and bottom up, 110 Sources of Value test of assumptions, 309

total assets, 68 work in progress, 68

transaction costs, 146, 165, 476 working capital

treadmill (of stock exchange performance), 380 basic description, 70

type 1, 2 or 3 sensitivities, 158 calculation method, 83

financing effects, 437

U-shaped valley, 171 recovery (via residual value), 236

unbundling, 445 standard methodology convention, 255

uncertain uncertainty, 350 target setting, 111

uncertainty, 142, 348 World Mine Cost Data Exchange Inc, 296

understanding accounts, see accounting WYMIWYG, 110, 134, 383

US GAAP, 66

Yellow Moon Chemical Company

Valuation â€“ Measuring and Managing the Value of ABCDE valuation example, 374

Companies, 184, 235, 330 initial case study, 244

value (concept thereof), see economic value model sources of value example, 304

value creation valuation example, 353

basic concept, 139 yield graph, 402

continuous good surprises, 379

value destruction, 383 zero NPV

value drivers, 383 decision rule, 14

value growth, see value profile type 2 sensitivities, 158

value map, 301 why invest in zero NPV projects, 453

ñòð. 193 |