Notes of a second year student studying Bachelors of Accounting at the University of the Free State. With this notes that i have compiled, i was able to proudly say that i received a distinction in Financial Management by using this notes. If you are struggling with Financial Management use this no...
Summary: Ratio Analysis - Corporate Finance [EMNF2724]
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EMNF2724 (EMNF2724)
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LU 10: Share Valuation (chapter 9)
# Not guaranteed dividends/ fixed → Fixed dividends (coupon rate x
# Have pre-emptive right nominal value)
# Have voting rights → No voting rights
→ Preferential rights on liquidation
• Nominal / Face Value
Par Value • Initially used
• Value that appears in SPL
• MV = PV = P0
Market Value • What market is willing to pay for shares
• NOT value according to company
• Value in SFP
Book Value
• Total assets - (liabilities + pref shares + intangible assets)
• Economic / company value
• Free cash flow valuation
Intrinsic Value
• IV > MV - buy the share, as it is undervalued
• IV < MV - Do not buy share, as it is overvalued
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