Tham khảo tài liệu 'cash rules: learn & manage the 7 cash-flow drivers for your company's success_10', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | CHAPTER FOURTEEN CASH RULES The real value of the firm is rarely if ever based on book value that is the accounting value of the assets. Rather it is based on the cash-earnings stream those assets are likely to produce. balance-sheet values at the lower of cost or market really means cost unless there is some clear and compelling evidence of a need to write down or devalue one or more assets. The real value of the firm is rarely if ever based on book value that is the accounting value of the assets. Rather it is based on the cash-earnings stream those assets are likely to produce. The higher the expected cashearnings stream the higher the market value. Value is also enhanced by growth in that cash-earnings stream. The higher the growth rate the higher the market value. And finally there is the issue of reliability. The more stable the pattern of the cash-earnings stream the more it is valued. Good cash earnings then with high growth and consistency make market value. The reverse is also true. Lower and less-certain streams with slow or no growth reduce market value by adding to risk. The marketplace treats risk as a cost and in effect deducts that cost from what might otherwise be the standard market value of a a firm with average earnings average growth average stability and average risk. How this risk is evaluated is quite different for lenders and for equity owners that is shareholders. In their evaluation of risk and its associated costs bankers are increasingly separating credit decisions from business decisions. The credit decision revolves around whether to make a particular loan. The business decision begins after a positive credit decision is made. It centers on the loan s terms especially interest rate along with collateral and guarantees. For the lender additional risk is compensated for by a combination of higher interest rate and greater security. If the banker can quantify the fact that company A has a loan default probability of 2 and company B a .
