Weighted Average Cost of Capital (WACC) is an important input in the process used for determining the value of a firm. In our Corporate Finance First Course we visit this concept as well as the concept of Beta which is an essential ingredient in the Cost of Equity calculation part of the WACC equation.
Relevering Beta Leverage is quite often used to improve returns. When evaluating a business, it is important to assess underlying performance with as well as without the impact of leverage. To measure performance without the impact of capital structure, we need un-levered Beta or Asset
Over the course of AMD’s four decades in business, silicon and software have become the steel and plastic of the worldwide digital economy. While dated in terms of numbers, results, industry structure and the state of the semi-conductor industry, the AMD case does a thorough
Balance Sheet Summary Dec 1999 US$ (000) (YEAR) Dec 1998 US$ (000) (12-MOS) Dec 1996 US$ (000) (12-MOS) Dec 1995 US$ (000) (12-MOS) Cash 294,125 361,908 166,194 113,354 Securities 302,386 335,117 220,004 377,293 Receivables 445,187 428,220 229,837 285,892 Allowances 15,378 -12,663 -9,809 -10,159 Inventory 198,213
The most difficult part in valuing a business is the pro forma projections and the calculations of free cash flows. Most major errors in the valuation exercise are found in these two parts. Valuation aims at seeing that if a business generates a certain amount