Equity & Stock Analysis/Valuation

Hussain, Ashiq (2009): Equity & Stock Analysis/Valuation.

Abstract

Insolvency predicator should be read in conjunction with Net Worth of the company & then ascertain potential loss on investment, however liquidation does not took place, just because of inability to pay off debts or other liabilities in short while and not just on the will of lender or creditors ,but depends upon many other factors like earning potential of the company, qualities/vision of management, shareholders/group capacity of pouring additional funds or absorbing losses , lender/creditors tolerance limits and customer faith on the products of the company

• Item Type: MPRA Paper
• Language: English
• Keywords: Relative valuation for short term horizon of 12 months has been based on P/E multiple and EV multiple,(Except for loss sustaining companies where P/E is replaced with E/P) derived from estimates of forward year 2010. EV multiple help in comparing company’s performance with its peers irrespective of depreciation & finance expenses, while PE multiple helps in comparing company peers with respect to earning potential, Valuation is based on multiples of the respective company to arrive at fair value and avoid exaggeration because industry multiples, as stated earlier, are misleading due to unstable economy and unorganized industry as well as rolling stock market (which is running under control since last year and floor lifting was conditional to IMF approval) Intrinsic Long Term valuation is reflected from DCF of respective company , which is based on comprehensive financial statements, prepared in accordance with historical norm of respective companies and vision/strategy of their managements
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions

References

Audited accounts of related companies , Material & Reports published by Ministry of production and information's from the Association of Cement manufacturer in Pakistan