Source: Evernote 20120801_20131231
http://people.stern.nyu.edu/adamodar/
- The Paths to Value Creation: Using DCF framework, there are four basic ways in which value of firm can be enhanced
- cash flow from existing assets to the firm can be increased
- increasing after tax earnings from assets in place or
- reducing reinvestment needs net capital expenditures or working capital
- the expected growth rate in these cash flows can be increased by either
- increasing the rate of reinvestment in the firm
- improving the return on capital on those reinvestments
- the length of high growth period can be extended to allow for more years of high growth
- the coast of capital can be reduced
- reducing operating risk of investment assets
- changing the financial mix
- changing the financing composition
- cash flow from existing assets to the firm can be increased
- Value Creating Growth… Modes of organic growth vary in value creation intensity…
- New product market development
- expanding an existing market
- maintaining/growing share in growing market
- competition for share in stable market
- acq (25th to 75th percentile result)