Valuation Workbook
Step-by-Step Exercises and Tests to Help You Master Valuation
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Valuation Workbook
Step-by-Step Exercises and Tests to Help You Master Valuation
About This Book
A vital companion to the bestselling guide to corporate valuation Valuation Workbook, 7th Edition is the ideal companion to McKinsey's Valuation, helping you get a handle on difficult concepts and calculations before using them in the real world. This workbook reviews all things valuation, with chapter-by-chapter summaries and comprehensive questions and answers that allow you to test your knowledge and skills. Useful both in the classroom and for self-study, this must-have guide is essential for reviewing and applying the renowned McKinsey & Company approach to valuation and reinforces the major topics discussed in detail in the book. Fully updated to align with the latest edition of Valuation, this workbook is an invaluable learning tool for students and professionals alike and an essential part of the McKinsey Valuation suite.
Frequently asked questions
Part One
Questions
1
Why Value Value?
- Data from both Europe and the United States found that companies that created the most shareholder value showed ____________ employment growth.
- The _______________ in the late 1990s, and the ___________ in 2007â08, arose largely because companies and banks focused on ___________ over ____________.
- Maximizing current share price is not equivalent to maximizing longâterm value because ____________.
- Discretionary expenses that managers can slash in order to pump up shortâterm profits include ____________.
- During the Internet boom of the late 1990s, many firms lost sight of value creation principles by blindly pursuing ____________ without ____________.
- The empirical evidence shows that the link between the value created by the acquisition of another company and earnings per share (EPS):
- Is strong and positive.
- Does not exist.
- Is weak and negative.
- Is strong and negative.
- Paying attention to which of the following tends to lead to a company creating longâterm value for shareholders?
- Cash flow.
- Earnings per share.
- Growth.
- Return on invested capital.
- I and II only.
- II and III only.
- II, III, and IV only.
- I, III, and IV only.
- A firm that grows rapidly will:
- Always create value.
- Create value if the return on invested capital (ROIC) is greater than the cost of obtaining funds.
- Create value if the return on invested capital (ROIC) is less than the cost of obtaining funds.
- Create value if the firm increases market share.
- In order to create longâterm value, companies must:
- Focus on keeping costs at a minimum.
- Find the optimal debtâtoâequity ratio.
- Seek and exploit new sources of competitive advantage.
- Monitor and follow macroeconomic trends.
- Focus on shortâterm results by banks was a contributing factor to the financial crisis of 2007â08.
- True
- False