What we think is important varies with our personal circumstances and the stage of the business cycle. If you talked to people three years ago – when the stock market was booming and everybody was raising money to buy dot-coms that were going to be our saviors and that were going to change everything we [...]
The basic message in mergers and acquisitions is that most M&A destroys value. We look at the data over and over again, and most acquisitions simply don’t pay off. Yet corporations still consistently make large-scale acquisitions. Trying to persuade senior executives not to pay 30 percent to 40 percent premiums to buy other companies is [...]
The most important type of financial analysis is basic ratio analysis. Every financial executive has to have a very good understanding of accounting. This is where some academic finance programs have fallen down: Collectively we have de-emphasized accounting and have emphasized economics. As Enron has reminded us, financial executives and financial academics have to have [...]
Present value is the current value to an individual of the stream of cash flows generated by a particular security. It is essentially a personal value reflecting the time and risk value of money to an individual or corporation. When the resulting present value is estimated and compared to the cost of the security or [...]
