【文章內(nèi)容簡介】 ultiplier is a more volatile variable than earnings. After you estimate the future earnings per share (E) and future earnings multiplier (P/E) you multiply them together to get an estimate of what the stock market series will be worth at the end of the period. End of period index value = (Efuture)(P/EFuture) d: Calculate the expected rate of return for a stock market series. Example: you forecast that next period g will be 9%, k will be 12%, the dividend payout will be 40%, and the index’s earnings will be $300. Thus you feel that the cash dividend of the index will be $120 next period. The index is currently at 3,600. What will the return on the index be for the period based on your projections? Step 1: calculate the P/E ratio. (.4)/(.12 – .09) = Step 2: calculate the expected value of the index at yearend. (P/E)(E) = ()(300)= $4,000. Step 3: calculate the expected return. [120 + (4000 – 3600)]/3600 = .1444 = % e: Explain how the topdown approach can be used to analyze the valuation of world stock markets. The procedure used here for analyzing a . market index can be used to analyze any market index. The expected return should be calculated for all . markets, especially the major world markets. Market index PE ratios will vary across national borders because of different economic outlooks, GDP, capital investments, industrial production, inflation, and interest rates. : Industry Analysis a: Describe the process for estimating earnings per share (EPS) for an industry and estimate the EPS for an industry. Step 1. Forecasting sales per share. The three techniques used to forecast sales are: a. industry life cycle analysis, b. inputoutput analysis, and c. studying industry relationships. Step 2. Analyze the petition within the industry. The earnings forecast should be preceded with an analyses of the petitive structure for the industry. A review of the petitive nature of the industry is necessary because the profitability of a specific firm in an industry is heavily influenced the petitive environment in which it must do business and the profitability of the industry as a whole. Step 3. Forecasting the industry profit margin: (a) this step requires the analyst to estimate the industry gross profit margin using economic variables related to the industry. Multiplying the projected EBDIT profit margin times the industry sales per share estimate yields an estimate of the industry’s earnings per share before depreciation, interest and taxes, (b) using time series analysis the analyst can then forecast the industry’s depreciation per share (D), interest expense per share (I) and tax rate (T). Step 4. Putting it all together (estimating earnings per share). The analysts can now forecast industry earnings per share using the following formula: Estimated EPS = [(sales per share estimate)(EBDIT %) D I](1 T) b: Describe the industry life cycle and identify an industry39。s stage in its life cycle. 1. Pioneering phase: during the start up phase the industry experiences modest sales growth and very small or negative profit margins. The market is small and firms incur major developmental costs. 2. Rapid accelerating growth phase: during this stage markets develop for the industry’s products and demand grows rapidly. There is limited petition among the few firms in the industry, and profit margins will be very high. High sales growth and profit margins. 3. Mature growth phase: here, sales growth is still above normal, but growth is no longer accelerating. Competition increases and profit margins begin to decline. The number of petitors increases and profit margins move toward normal levels. 4. Stabilization and market maturity phase: this is the longest phase. Industry growth rates will approach the growth rate of the aggregate economy. Competition produces tight profit margins and ROEs bee petitive (normal). 5. Deceleration of growth and decline: here demand shifts away from the industry. Growth of substitute products causes declining profit margins. c: Describe the basic forces that determine industry petition. Rivalry among the existing petitors: Rivalry increases when many firms of relatively equal size pete within an industry. Slow growth leads to petition when firms fight for market share, and high fixed costs leads to price cutting as firms try to operate at full capacity. Threat of new entrants: Look for things that discourage new entrants like barriers to entry and economies of scale. Why? New entrants represent increased petition. Threat of substitute products: Substitute products limit the profit potential of an industry. Why? They limit the prices firms can charge. The more modity like the product, the greater the petition and the lower the profit margin. Bargaining power of buyers: The ability of buyers to bargain for lower prices or higher quality when purchasing between peting firms within an industry influences the selling firm’s profitability. Bargaining power of suppliers: The ability of suppliers to raise prices or lower quality influences industry profitability. Suppliers are more powerful if there are just a few of them and if they are more concentrated than firms in the industry to which they sell. d: Describe two techniques for estimating an earnings multiplier for an industry and estimate the earnings multiplier for an industry. Macroanalysis of an industry multiplier assumes there is a relationship between the market’s k and g and the industry’s k and g. This technique adjusts the industry multiplier upwards or downwards based on the projected market multiple. Microanalysis of an industry multiplier can take a direction of change approach where industry variables are studied and then used to adjust the existing industry multiple upward or downward. The preferred approach though is the specific multipl