ing trong sự hướng dẫn của lợi nhuận kinh tế và tạo ra sự giàu có so với các công ty xấu mà chỉ theo hướng hủy diệt sự giàu có. Với nền tảng này, chúng tôi sẽ tập trung vào các đặc điểm tài chính của các công ty gặp khó khăn nguy hiểm (các cơ hội bán ngắn). | 284 SHORT SELLING STRATEGIES ing in the direction of economic profit and wealth creation versus bad companies that are pointing in the direction of wealth destruction. With this background we will now focus on the financial characteristics of risky troubled companies short sell opportunities . NEGATIVE NPV DISCOVERY OF BAD COMPANIES Now that we have provided a conceptual foundation on the financial characteristics of wealth creators we can use the wealth model to gain insight into the financial characteristics of wealth destroyers. Not surprisingly this latter company type represents a potential sell or short sell opportunity. To see this suppose that the firm s managers anticipate that the 100 million investment will generate an after-tax cash flow of say million in the future period. The NPV consequence of the firm s 100 investment opportunity is shown in Exhibit . Exhibit shows that the firm s initial capital is 100 million. The exhibit also shows that the firm s expected cash operating profit is million. Upon subtracting the company s expected financing costs at 110 million from the anticipated cash operating profit NOPAT at million the manager or investor in our case sees that the firm is left with negative residual income of - million. This The Economic Profit Approach to Short Selling 285 EXHIBIT Wealth Destruction with Negative EVA residual income is the firm s expected EVA in the reduced operating that is return on capital now at environment. Note that if a company is a wealth destroyer in the future due to the negative-anticipated EVA then it must also be a wealth waster in the present. By discounting the negative EVA by the 10 cost of capital we obtain the adverse NPV result NPV MVA EVA 1 COC - - million As a wealth destroyer it is apparent that the firm s NPV is negative because the after-tax return on capital ROC at falls short of the cost of capital at 10 . Equivalently the NPV of
