Business Analysis and Valuation docx

[...]... for Business Analysis and Valuation Using Financial Statements 1-11 Part 1 Framework 3 Joe Smith argues that “learning how to do business analysis and valuation using financial statements is not very useful, unless you are interested in becoming a financial analyst.” Comment 4 Four steps for business analysis are discussed in the chapter (strategy analysis, accounting analysis, financial analysis, and. .. Framework for Business Analysis and Valuation Using Financial Statements A Framework for Business Analysis and Valuation Using Financial Statements While the value of a firm is a function of its future cash flow performance, it is also possible to assess a firm’s value based on the firm’s current book value of equity, and its future return on equity (ROE) and growth Strategy analysis, accounting analysis, and financial... chapter S Business Analysis and 2 Valuation Tools trategy analysis is an important starting point for the analysis of financial statements Strategy analysis allows the analyst to probe the economics of the firm at a qualitative level so that the subsequent accounting and financial analysis is grounded in business reality Strategy analysis also allows the identification of the firm’s profit drivers and key... value and ROE Financial analysis allows you to gain an in-depth understanding of what drives the firm’s current ROE The predictions from a sound business analysis are useful to a variety of parties and can be applied in various contexts The exact nature of the analysis will depend on the context The contexts that we will examine include securities analysis, credit evaluation, mergers and acquisitions, evaluation... evaluate a firm’s current and prospective performance This chapter has outlined the framework for business analysis with financial statements, using the four key steps: business strategy analysis, accounting analysis, financial analysis, and prospective analysis The remaining chapters in this book describe these steps in greater detail and discuss how they can be used in a variety of business contexts DISCUSSION... Framework for Business Analysis and Valuation Using Financial Statements A Framework for Business Valuation Using Financial Statements 1-28 EXHIBIT 4 Bilateral U.S Dollar–Korean Won Exchange Rate 110 Korea Stock Exchange 1998 100 Won per Dollar 90 80 70 60 50 Source: Bank of Korea Aug 98 Jun 98 Apr 98 Feb 98 Dec 97 Oct 97 Aug 97 Jun 97 Apr 97 40 Feb 97 28 A Framework for Business Analysis and Valuation. .. (competitive positioning), and (3) the way in which the firm expects to create and exploit synergies across the range of businesses in which it operates (corporate strategy) Strategy analysis, therefore, involves industry analysis, competitive strategy analysis, and corporate strategy analysis. 1 In this chapter, we will briefly discuss these three steps and use the personal computer industry and Amazon.com, respectively,... Deals for foreign direct investment could not be consummated because of widespread disagreement in valuation estimates of Korean sellers 19 A Framework for Business Analysis and Valuation Using Financial Statements A Framework for Business Valuation Using Financial Statements and foreign buyers These valuation difficulties were exacerbated by the poor quality of accounting information Further, foreign... LG, Daewoo, SK, Ssangyong, and Hyosung 13 A Framework for Business Analysis and Valuation Using Financial Statements A Framework for Business Valuation Using Financial Statements that underpin the functioning of advanced markets were either missing or underdeveloped in Korea In advanced markets, intermediary institutions and legal structures address potential information and incentive problems These... put option; government 9 This section is based on reports published by the Ministry of Finance and Economy (MOFE) and the Financial Supervisory Commission (FSC) in Korea 17 A Framework for Business Analysis and Valuation Using Financial Statements A Framework for Business Valuation Using Financial Statements would inject fresh capital to enhance the acquiring bank’s capital adequacy . corporate managers has both costs and benefits. A Framework for Business Analysis and Valuation Using Financial Statements 5 A Framework for Business Analysis and Valuation Using Financial Statements . A Framework for Business Analysis and Valuation Using Financial Statements 7 A Framework for Business Analysis and Valuation Using Financial Statements 1-8 firm’s industry and its competitive. strategy analysis General business analysis Business Strategy Analysis Generate performance expectations through industry analysis and com- petitive strategy analysis. Accounting Analysis Evaluate