Nancy Smith says she is uncomfortable making the assumption that TJX’s dividend payout will vary from year to year. If she makes a constant dividend payout assumption, what changes does she have to make in her other valuation assumptions to make them internally consistent with each other?
Answer to relevant QuestionsDespite many years of research, the evidence on market efficiency described in this chapter appears to be inconclusive. Some argue that this is because researchers have been unable to link company fundamentals to stock ...Intergalactic Software Company’s stock has a market price of $20 per share and a book value of $12 per share. If its cost of equity capital is 15% and its book value is expected to grow at 5% per year indefinitely, what is ...What are the critical performance dimensions for (a) a retailer and (b) a financial services company that should be considered in credit analysis? What ratios would you suggest looking at for each of these dimensions?A leading retailer finds itself in a financial bind. It doesn’t have sufficient cash flow from operations to finance its growth, and it is close to violating the maximum debt-to-assets ratio allowed by its covenants. The ...Under current U.S. accounting standards, acquirers are required to capitalize goodwill and report any subsequent declines in value as an impairment charge. What performance metrics would you use to judge whether goodwill is ...
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