What is the importance of purchasing power parity when you are trying to establish value for a company located in an emerging market?
Answer to relevant QuestionsExplain the conservation of value principle. What decisions might it affect? Identify four risks associated with emerging markets that affect enterprise discounted cash flow (DCF) valuation. How should these risks be treated within the enterprise DCF model? How does the total market for a new product differ from a company’s addressable market? Which market is more relevant for forecasting a company’s revenues? Why should a scenario approach to valuation be used to value cyclical companies? In a bank valuation, the amount of current loan loss provision is not deducted from the DCF result. Why is it then important to analyze the adequacy of the bank’s current loan loss provisions?
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