Entering Data for Other Valuation Accounts

On the Other Valuations tab, select to have your cash flows discounted at mid-period or end-of-period. Mid-period discounting assumes that cash flows arrive (on average) at the mid-point of a period; end-of-period discounting assumes that the cash flows all arrive at the end of a period. You can enter some other adjustments to each of the three valuation methods used in Strategic Finance.

See Valuation Theory.

  Entering Data for Other Valuation Accounts:

  1. Access Tax and Valuation Options.

    See About Tax and Valuation Options.

  2. Select Other Valuation tab.

  3. In Current Stock Price, enter a value.

    Enter the stock price as of the last day in history. This value can be compared to the Shareholder Value per Share, Equity Value Per Share and Economic Profit Shareholder Value per Share to see if the market seems to be undervaluing or overvaluing the stock.

    Note:

    Enter the current stock price for the company you are modeling to use for comparison to the Shareholder Value per Share on the valuation reports. This amount appears at the bottom of the reports with the Shareholder Value per share. The Premium/Discount Over/Under Market (%) account calculates and display the percent that the Shareholder Value per Share is over or under the current stock price.

  4. Select a Calculate Discount Factor as option.

    • End-of Period. Select the End-of-Period Discount Factor if discounting is to be done at the end of a period.

    • Mid-Period. Select the Mid-Period Discount Factor if discounting is to be done at the mid-point of a period.

  5. In Market Value of Debt, enter a value.

    Enter the Market Value of Debt which is calculated using the yield to maturity of all debt instruments in a company’s debt portfolio. The Market Value of Debt must be deducted from Corporate Value or Economic Profit Corporate Value to arrive at Shareholder Value or Economic Profit Shareholder Value.

  6. In Underfunded Pension Liabilities, enter a value.

    Enter Underfunded Pension Liabilities which must be deducted from Corporate Value or Economic Profit Corporate Value to arrive at Shareholder Value or Economic Profit Shareholder Value.

  7. In Market Value of Other Obligations, enter a value.

    Enter the Market Value of Other Obligations which represents the market value of other obligations not included in Market Value of Debt or Underfunded Pension Liabilities. Market Value of Other Obligations must be deducted from Corporate Value or Economic Profit Corporate Value to arrive at Shareholder Value or Economic Profit Shareholder Value.

  8. In Investments in Stocks and Bonds, enter a value.

    Enter the Investments in Stocks and Bonds which represents the market value of the company’s current portfolio of long-term investments in stocks and bonds. Investments in Stocks and Bonds are included in Corporate Value.

  9. In Cost/Equity Adjustment, enter a value.

    Enter the adjustment to be added to Corporate Value for an investment using the Cost or Equity method of consolidation. This adjustment should be the ownership % * Shareholder Value of the investment.

    This adjustment calculates if the investment is consolidated into the current Strategic Finance file using the Cost or Equity method of consolidation.

  10. In Minority Interest Adjustment, enter a value.

    Enter the adjustment to be subtracted from Shareholder Value for an investment using the Minority Interest method of consolidation. This adjustment should be the ownership % * Shareholder Value of the investment.

    This adjustment is automatically calculated if the investment is consolidated into the current Strategic Finance file using the Minority Interest Method of consolidation.

  11. In Market Value of Other Liabilities, enter a value.

    Enter the Market Value of Other Liabilities - DDM which is deducted from the Estimated Equity Value.

  12. In Market Value of Other Assets, enter a value.

    Enter the Market Value of Other Assets - DDM which is added to the Estimated Equity Value.

  13. In Cost/Equity Adjustment, enter a value.

    Enter the adjustment to be added to Economic Profit Corporate Value for an investment using the Cost or Equity method of consolidation. This adjustment should be the ownership % * Economic Profit Shareholder Value of the investment.

    This adjustment is automatically calculated if the investment is consolidated into the current Strategic Finance file using the Cost or Equity method of consolidation.

  14. In Minority Interest Adjustment, enter a value.

    Enter the adjustment to be subtracted from Economic Profit Shareholder Value for an investment using the Minority Interest method of consolidation. This adjustment should be the ownership % * Economic Profit Shareholder Value of the investment.

    This adjustment is automatically calculated if the investment is consolidated into the current Strategic Finance file using the Minority Interest Method of consolidation.

  15. Click OK.