The fallacies of Scenario analysis
Scenario analysis is often used in company valuation – with high, low and most likely scenarios to estimate the value range and expected value – but do they give correct answers?
FRM
Valuation as a strategic tool
Valuation is something usually done only when selling or buying a company. However it is a versatile tool in assessing issues as risk and strategies both in operations and finance …
What is the correct company value?
The only concept which has gained universal acceptance by economists is that the value of an asset is determined by the expected benefits it will generate …
The Probability of Gain and Loss
Every item written into a firm’s profit and loss account and its balance sheet is a stochastic variable with a probability distribution derived from probability distributions for each factor of production.
The weighted average cost of capital
The weighted cost of capital and the return on invested capital are the most important elements in company valuation, and the basis for most strategy and performance evaluation methods …
Risk – Exposure to Gain and Loss
It is first when the decision involves consequences for the decision maker he faces a situation of risk ..