Essay on Cash Flow, A Stock Price Of The Company Grounded On The Stock Value

Essay on Cash Flow, A Stock Price Of The Company Grounded On The Stock Value

Length: 980 words (2.8 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Part One
A way of valuing a stock price of the company grounded on the theory that the stock of the company is worth the summation of its payments of future dividend, discounted back to their present value is the dividend discount model (DDM). In simple words, it is used for valuing stocks grounded on the future dividends? NPV. In valuation techniques of discounted cash flow, the stock value is assessed grounded on PV of cash flow?s some measures. For cash flow, dividends are the most straightforward and cleanest measure for the reason that these clearly are cash flows that directly go to the investors. There three major components in DDM.
Intrinsic Stock Value (Valuation Summery)
Required Rate of Return (r)
Dividend Growth Rate (g)
Intrinsic value
For investors, intrinsic value calculation is very significant. Intrinsic value calculation assists them in deciding whether it is good to buy the stock or not. Investor will fail to buy an overvalued stock; though, they can buy an undervalued stock. A share?s intrinsic value signifies the company?s actual value and it comprises other variables, for example, trademarks, copyrights, and brand that cannot be redirected in the share?s market value. For calculating a share?s intrinsic value, company?s required rate of return, growth rate, and year 0 divided are required (Alvarez, 2015).
Undervalued Stock of Apple
For investors, stocks? intrinsic value is vital when it comes to determine the undervaluation or overvaluation of stock. The share is overvalued if the market value is higher than the share?s intrinsic value. Similarly, the share is undervalued if the market value is lower than the share?s intrinsic value (Investorwords, 2015). The intrinsic value of Apple 's c...

... middle of paper ...

...). What Is The Intrinsic Value Of A Stock. investopedia. Retrieved from
Boundless. ?Types of Financial Decisions: Investment and Financing.? Boundless Finance. Boundless, 21 Jul. 2015. Retrieved from
Kaplan Financial,. (2015). Retrieved from

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

The Stock Price Of A Company Essay

- The stock price of a company is one way to gauge the relative health of the company. The stock market, which includes the buyers, sellers, and investors, is always looking for ways to measure one company against another. By using stock price, dividends, earning per share, and bond rating, outsiders are able to gauge the overall health of a company against another one. In this method of looking at the trends of these indicators, comparisons can be made between Team Andrews and Team Baldwin over the course of rounds 4-6 in the Capsim simulation....   [tags: Stock market, Stock, Share, Finance]

Better Essays
729 words (2.1 pages)

Essay on Security For Financial Market Investment

- These are the most known security for financial market investment. This type of security represents the practice of ownership in a specific company. The fact is that ownership of particular firms end up being divided within a number of stocks according to shares. Stocks tend to share a tiny fraction of any firm. The stock holds a tiny fraction of ownership of the firm whereby it holds itself in such a right position to take part in the decisions of the firms. Net profit in a company is divided in two destinies such as through investment of the profits on the firm....   [tags: Stock, Stock market, Mutual fund, Stock exchange]

Better Essays
1012 words (2.9 pages)

Essay on Stock Markets The Price Of Stock Movements

- However in stock markets the price of stock movements at some stage in the day additionally as proven underneath. Margin buying and selling enables investor profit from intraday actions within the stock markets if the price actions to his favors. Graph No. 3.2 Margin buying and selling of Capital Win Let’s see this graph to understand how it works. Say, if investor will have taken a buy position at 9:15 a.m. at Rs. 69.85 and exited at Rs. 70.60 at 11:00 a.m., investor would have earned a go back of 1% on total alternate value and effective go back could have been about 5% of investor overall capital used for alternate....   [tags: Stock market, Stock, Share, Share price]

Better Essays
748 words (2.1 pages)

Essay on Notes On The Future Stock Price

- As we discussed in the introduction part, whether or not the future stock price could be predictable still fiercely debated in finance areas. Basing on some certain trading rule of the strategies, investors could earn abnormal returns through the predictability of stock price. This chapter is aim to review the momentum studies in recent years. Currently, there has been an extensive literature paragraphs on the alternative explanations of momentum strategies which including the source, the profit and the characteristics....   [tags: Stock market, Stock, Stock exchange, Share price]

Better Essays
1309 words (3.7 pages)

Financial Ratios And The Stock Price Essay

- Investors usually compare between the amount they have to spend and the expected return from their investment. If there is a significant benefit, they intend to invest more in a company. Consequently, they monitor the interested company’s performance regularly and do the comparison with others in the same industry. In Lewellen (2004) research, he said that financial ratios like earnings per share, price earnings and dividend ratios can be used for prediction return. As per the paper, if the share is overpriced, the ratios are low and therefore the estimated future return will be low....   [tags: Financial ratio, Stock, Stock market, P/E ratio]

Better Essays
1125 words (3.2 pages)

The Cost Of Capital On The Stock Price And Future Market Positioning Essay

- This brief should serve as a crash course on the significance of our cost of capital and provide the implications that the cost of capital has on our stock price and future market positioning. Raising capital is an essential part of any business operation, this is no different for us. Without the funds obtained from raising capital, our business would not be able to grow and remain competitive. We would not be able to purchase new equipment, property, technology, R&D, etc, without the capital raised from outside our organization....   [tags: Stock market, Finance]

Better Essays
903 words (2.6 pages)

Stock Performance Analysis : Ulta Essay

- Stock Performance Analysis Ulta’s stock performance from 2010 to the present has been positive. According to Yahoo Finance (n.d.), in Jan 2010 Ulta’ stock was around $19.40 per share and in January of 2015 the price per share was around $126.84. The company has experienced an increase of $137.88 from 2010 to 2015 which is a 610% percent increase. Ulta’s stocks have increased steadily over the past five and a half years, based on the highest closing price per year. The price per share was $34.95 in 2010 which increased to $69.63 in 2011....   [tags: Stock market, Stock, Finance, Share price]

Better Essays
1193 words (3.4 pages)

The Stock Market And Stock Exchange Essay

- This paper will encompass the importance of the U.S stock market/stock exchange versus the Chinese stock market/ stock exchange, with a brief introduction about how each stock market/stock exchange came into existence, the importance of each stock market/stock exchange, how the U.S and Chinese manage their stock markets/stock exchange, how corporations are appointed plus the rules and regulations. This will also entail random facts about each stock market/stock exchange. Stock markets are like hitting a royal flush, if the price of your stocks goes up, you win; if it drops, you lose....   [tags: Stock market, Stock exchange, Stock]

Better Essays
2138 words (6.1 pages)

The Stock Valuation Of Market Prices And Profit From Price Changes Essay

- The main use of stock valuation is to predict future market prices and profit from price changes. The strongest stock valuation method, the discounted cash flow (DCF) method of income valuation, demands discounting the profits (dividends, earnings, or cash flows) the stock will bring to stockholders in the anticipated future, and computing a final value on disposal. There are plenty of different techniques to value stocks. The major part is to capture each approach into account while articulating a general opinion of the stock....   [tags: Stock market, Fundamental analysis, Stock]

Better Essays
753 words (2.2 pages)

Grounded Theory : Grounded Theories Essay

- Grounded Theory Grounded Theory (GT) is an established research approach used to generate theories, and it has been applied based on empirical data in many fields. However, Barney Glaser and Anselm Strauss (1967) start using this approach in sociological theorizing based on qualitative inquiry. Since then, Grounded Theory (GT) approach appears as a powerful (ke, J. and Wenglensky, S., 2010) and widely popular (Birks, M., and Mills, J., 2015; El Hussein, M., Hirst, S., Salyers, V., and Osuji, J., 2014) qualitative research approach for developing theory grounded in qualitative data....   [tags: Qualitative research, Grounded theory]

Better Essays
2480 words (7.1 pages)