Work detail

Company valuation

Author: Mgr. Miloš Čebík
Year: 2005 - summer
Leaders: Ing. Irena Jindřichovská CSc.
Work type: Finance and Banking
Language: English
Pages: 115
Awards and prizes:
Abstract: The diploma thesis “Company Valuation” deals with different theoretical approaches to the valuation and its practical application on the example of Starbucks Corporation. The main emphasis is given to the discounted free cash flow approach and to the relative valuation technique. Firstly, the theoretical background for the estimation of variables such as discount rates and growth rates is put forward. Later, the fundamentals of the basic multiples as PE ratio, PBV ratio and PS ratio are derived. Consequently, the relative and discounted cash flow valuations are evaluated, stating the advantages and disadvantages of each methodology. In the second part of the thesis the Starbucks Corporation is introduced and earnings model built where the quest for value rests mainly on the underlying assumptions about the future performance. The price is estimated also though relative approach, the multiples are compared across three groups of comparable firms. Consequently, on the basis of data for US companies, the impact of fundamentals on the multiples is quantified using a simple regression model.
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