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CITATION

Hackel, Kenneth. Security Valuation and Risk Analysis: Assessing Value in Investment Decision-Making. US: McGraw-Hill, 2010.

Security Valuation and Risk Analysis: Assessing Value in Investment Decision-Making

Authors: Kenneth Hackel

Published:  October 2010

eISBN: 9780071744430 0071744436 | ISBN: 9780071744355
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  • Contents
  • Preface
  • Acknowledgments
  • Chapter 1 Overview
  • The Macro Environment
  • Making Effective Use of Financial Statements
  • Free Cash Flow
  • Return on Invested Capital
  • Financial Structure
  • Cost of Equity Capital
  • Cost-of-Capital Model
  • Application of Free Cash Flow and Cost of Capital
  • Chapter 2 Management
  • Comparative Analysis
  • Changes in Senior Management
  • Cash Flows, Productivity, and Stock Prices
  • Why It’s Cash Flow, Not Productivity, That Matters
  • Chapter 3 Statement of Cash Flows
  • Cash Flows from Investing Activities
  • Cash Flows from Financing Activities
  • Cash Flows from Operating Activities
  • Direct Method
  • Credit, Collections, and Treasury Department Software
  • Asset Sales
  • Cash Conversion Cycle
  • Supplemental Information
  • Power Operating Cash Flow
  • Chapter 4 Free Cash Flow
  • Taxes
  • Deferred Tax Assets and Liabilities
  • Quarterly Effective Tax Rates
  • Other Tax Credits
  • Stability of Tax Rate
  • Other Taxes and Incentives
  • Segments of Operation
  • Estimating Free Cash Flow
  • Adding Discretionary Excess
  • Capital Expenditures
  • Other Discretionary Items
  • Free Cash Flow, Return on Invested Capital, and Share Buybacks
  • Shares Outstanding
  • Cash-Flow Projections
  • The Significance of Adding Corporate Fat
  • Revenue Growth and Free Cash Flow
  • Chapter 5 Return on Invested Capital
  • EBITDA Is Inappropriate as A Valuation Tool and in Merger Analysis
  • A Superior ROIC Methodology Using Free Cash Flow
  • How Other Comprehensive Income Factors into ROIC Analysis
  • A Hodgepodge of Methods Currently in Use
  • Divisional Return on Capital
  • Recovery Rate
  • Evaluation of ROIC When Invested Capital Is Low
  • Chapter 6 Financial Structure
  • Internal and External Capital
  • Deferred Assets
  • Contingent Equity
  • Bank Credit Facilities
  • Debt, Financial Flexibility, and Covenants
  • Debt and Free Cash Flow During the 2007–2009 Credit Crisis
  • Adjusted Debt
  • Buying Back Debt
  • Goodwill
  • Off-Balance-Sheet Liabilities
  • Special-Purpose Entities
  • Contingent Liabilities
  • Hedging
  • Background on SFAS 133
  • Financial Structure and Debt Coverage
  • Credit-Rating Financial Ratios
  • Cash Burn Rate
  • Risk Profile
  • Principal Structure of Debt
  • Subsequent Events
  • Deferred Taxes
  • Pension and Other Postretirement Benefits
  • Pension Plan Surplus or Deficiency
  • Liabilities for Postretirement Benefits Other than Pensions
  • Postretirement Benefits Other than Pensions Compared with Total Debt and Shareholders’ Equity
  • Yield Spreads
  • Improving Financial Structure Through Exchange of Securities
  • Importance of Credit Rating
  • Fair-Value Accounting
  • SFAS 115
  • SFAS 166 and SFAS 167
  • Leases
  • Guarantees
  • Convertible Bonds
  • Preferred Stock
  • Chapter 7 Cost of Equity Capital
  • Cost of Equity Necessary for Valuation
  • The Constant-Growth-Dividend Model
  • The Cost of Equity Capital
  • Cost of Equity Using the Capital Asset Pricing Model
  • IBM Study of Cost of Equity Using Popular Approaches and Credit Method
  • Dividend-Growth Model to Calculate Cost of Equity
  • Implied Cost of Equity Model
  • Bond Yield Plus Risk Premium Model
  • Comparison
  • Spread versus Cost of Capital
  • Divisional Cost of Capital
  • Case Study: Sunoco
  • Chapter 8 Cost-of-Equity-Capital Credit Model
  • Cost-of-Capital Worksheet
  • Worksheet: Explanations and Definitions
  • Conclusion
  • Chapter 9 Portfolio Selection
  • Index