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Value of a company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Value of a company

  • This topic has 7 replies, 3 voices, and was last updated 8 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 29, 2016 at 7:30 pm #352449
    Ridwan
    Member
    • Topics: 24
    • Replies: 24
    • ☆

    Sir a Bpp kit q no 222 called Danoca Co says it is shortly to pay its annual dividend.Financial information presented state that its ex div share price value is $3.30.But while calculating value for this company they did not use $3.30 as a value per share.Why ??

    November 30, 2016 at 5:38 am #352491
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Because the question asks for a value using the PE ratio method.

    November 30, 2016 at 12:27 pm #352560
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    Sir, if there is a current earnings and forecast earning figure, and a PE ratio is given, which earnings figure will be useful in valuation of a company?

    November 30, 2016 at 3:40 pm #352620
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    For a current valuation then strictly the current earnings (because the PE will presumably have come from similar companies and is calculated based on current earnings).

    Forecast earnings would be relevant if the company is doing something that will increase the earnings and you are required to forecast the effect there will be on the value of the business.

    November 30, 2016 at 4:39 pm #352636
    Ridwan
    Member
    • Topics: 24
    • Replies: 24
    • ☆

    very kind of you

    December 1, 2016 at 6:35 am #352748
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

    December 1, 2016 at 9:36 am #352823
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    Thank you very much sir 🙂

    December 1, 2016 at 3:28 pm #352893
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

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