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ACCA F9 lectures ACCA F9 notes
April 10, 2016 at 6:54 pm
We are taking PE ratio of similar quoted companies, because we are considering to take over an unquoted company. What if the company under consideration is itself a quoted company, can we then, take the PE ratio of the company itself?
John Moffat says
April 11, 2016 at 6:53 am
We are using the PE to be able to place a value on the shares. If it is a quoted company then the shares will already have a market value.
April 11, 2016 at 11:18 am
So the acquisitions are always done on the market value, in case of quoted companies?
April 11, 2016 at 1:42 pm
Certainly not! (and neither are acquisitions of unquoted companies always done based on PE ratios).
If you are acquiring another company you will look at all different methods to get a basis for deciding how much to offer. If they are quoted then you obviously will not bother offering less than market value because the current shareholders will not be prepared to sell at less than market value.
April 11, 2016 at 7:38 pm
That means market value gives the minimum value for a company.
Thanks for the explanation John 🙂
April 12, 2016 at 6:01 am
May 10, 2015 at 8:39 am
Sir If we have to calculate the Market Value and the dividend in ABOUT TO PAID it means that we have to find Market Value Cum-Div And if the dividend in just paid then the Market Value that we calculate should be Ex-Div? And in finding the Required Rate Of Return we Always Subtract Current Dividend from the Market Value Cum-Div(Because we always deal with Ex-Div in Required Return)?
May 10, 2015 at 8:48 am
Yes, to both questions 🙂
(and, as I do say in the lectures, if you are not told then you always assume market values are ex div in the exam)
November 18, 2014 at 10:34 am
Sir, is Chapter 15 & 16 of F9 included in the syllabus of FFM?
November 18, 2014 at 11:21 am
No, not FFM 🙂
October 30, 2013 at 7:01 am
Sir, there is a term “Asset backing” in BPP book which is used in Valuation, can u please elaborate this term what does it mean?
November 11, 2013 at 3:45 pm
The term can mean several things, depending on the context. However, without seeing the relevant page in the BPP book and given that it is F9, it will simply be another term for the asset value (i.e. the value of the companies assets divided by the number of shares).
(Sorry for a delay in answering, but we cannot always see all the comments – it is better to ask questions in the relevant Ask the ACCA Tutor Forum – these questions are always answered very quickly)
January 29, 2016 at 10:51 am
#smartabrar asset backing means… how much the company has asset .. its showing the strength of company asset
October 29, 2013 at 7:42 am
Sir, I have a problem in Dividend cover, in BPP book it is mentioned that dividend cover is the number of times the actual dividend could be paid out of current profits but if we look at the formula it is Earnings per share /dividends per share..?? this does not explain the no. of times the dividend could be paid out of current profits, rather it should have been Dividends/ Earnings..??
October 29, 2013 at 8:19 am
No – what BPP says is correct.
Suppose the earnings per share is 50c and the dividend per share is 10c.
Then you could pay the dividend 5 times out of the current earnings. The dividend cover would be 5.
October 30, 2013 at 6:24 am
got it sir,, thanks
October 30, 2013 at 7:23 am
June 30, 2013 at 4:40 am
Sir, you are really great teacher . Your lectures are valuable for me,
Tks you so much.
June 5, 2013 at 7:31 pm
U’re d best John ….u lecture is the simplest version of f9 ..God bless u
June 5, 2013 at 4:27 pm
i’m not sure what i am doing wrong – how do you get a dividend cover of 2.06 with a P/E of 21.1 and a Dividend yeild of 2.3%?
June 5, 2013 at 4:42 pm
Divi per share (DPS) / Mkt value per share (MV) = 0.023
So……MV / DPS = 1 / 0.023 = 43.478
MV / EPS = 21.1, so MV = EPS x 21.1
So replacing MV in the equation in my second line gives: (EPS x 21.1) / DPS = 43.478
Dividing by 21.1 gives: EPS / DPS = 43.478 / 21.1 = 2.06 (= dividend cover)
Hope that helps 🙂
June 5, 2013 at 6:47 pm
Thank you so much!
June 5, 2013 at 6:54 pm
Business Finance looked so simple when you taught it but working these questions in the kit is a killer! I had fun working the Working Capital questions the Investment appraisal and cost of capital.
May 13, 2013 at 8:21 pm
Sir in which lecture or topic you have discussed about these topics
market capitalisation (equity market value?
price/earnings ratio method using the business sector average price/earnings ratio
i was doing past paper Q4 of december2012 where i saw those
May 13, 2013 at 9:17 pm
I cannot remember which lectures, but they are mentioned several times in different lectures, because the PE ratio in particular is so fundamental.
The market capitalisation is the total market value of the company’s shares (although I don’t know what you mean by discuss – there is nothing to discuss in that it is the market value of the company, by definition.)
The PE ratio is terribly important for the exam and again is covered completely in my lectures (and discussed 🙂 )
May 14, 2013 at 6:14 pm
thank you Sir
February 1, 2013 at 2:16 am
John teaches really well, thanks so much
November 18, 2012 at 8:44 pm
Thank you John, you are really good teacher and entertaining in the same time as well.. “nobody’s face moves, its worrying me” 😀
November 15, 2012 at 6:29 pm
i found topic in my kaplan book called Efficient market hypothesis (EMH) can you tell me what is this?
November 2, 2012 at 10:35 am
he is the best , he makes everything simple and easy to understand. thank u john,
May 18, 2012 at 4:57 pm
Sir John you are Gods gift to all of us Acca students.
May 5, 2012 at 11:51 am
John indeed stands for greatness.kudos, John and team
May 5, 2012 at 11:49 am
great man, great lecture God bless u John
March 24, 2012 at 8:04 am
sir there is problem in this lecture …. not playing despite of trying several times
Saad Bin Aziz says
December 4, 2011 at 1:17 pm
John simply has no comparison:-)
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