Equity-based, single-factor multiples Value drivers Earnings Assets Dividends Cash flow MPV P PBT BVE OD NCIfOA PAT NCIfIA HE FCFE
Notes: MPV--market price variable; P--market price; PBT--profit before tax; PAT--Profit after tax; HE--headline earnings; BVE--book value of equity; OD--ordinary dividends; NCIfOA--net cash inflow from operating activities; NCIfIA--net cash inflow from investment activities; FCFE--free cash flow to equity.
There is an added technical reason for using OCF as opposed to FCFE
. When a merger is accounted for using the purchase method (as opposed to the pooling method), the merged bank's EQUITY will include the goodwill recorded for the transaction, while the merging banks EQUITY will not.
[P.sup.pT] (PROFIT) also has a value higher than FCFE
; PROFIT is positive in 155 cases out of 250, while FCFE
is positive only in 90 cases out of 250.
On our estimates, starting from 2013 Transneft should be able to generate significant FCFE
, enabling it to potentially pay higher dividends.
(2) The expected growth in FCFE
will include growth in income from operating assets and not growth in income from increases in marketable securities.
model is simply a dividend discount model where the dividend is replaced by FCFE
The results for the ranked current-year cash flows to shareholder specifications indicate that ranked current-year dividends per share (DPS) was more useful than either the ranked current-year dividend payout ratio (DPR) or ranked current-year free cash flows to equity (FCFE
is a nonprofit charitable organization based in Phoenix, Arizona.
Free cash flow to equity (FCFE
) represents post-tax cash flows that are available to be distributed to all the equity fund providers of an entity, net of capital requirements to grow or maintain the business.
Currently, taking into consideration the solutions used in practice, the most popular methods are those that assess free cash flows, such as Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE
Free Cash Flow to Equity (FCFE