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2015 International Valuation Handbook. Industry Cost of Capital. Wiley Finance

  • ID: 3849631
  • Book
  • May 2016
  • Region: Global
  • 1056 Pages
  • John Wiley and Sons Ltd
Real–world cost–of–capital data from across industries and around the globe

2015 International Valuation Handbook Industry Cost of Capital is the essential reference for valuation professionals, providing country–level cost of equity capital estimates for more than 150 countries. Updated annually by the valuation experts at Duff & Phelps, this authoritative guide allows quick access to the data and adjustable capital models required to accurately determine company risk. Methodologies are systematically laid out in clear, concise language, and industry financial statistical calculations are explained in detail. Designed with a focus on practicality, this book provides extensive tables, charts, and definitions alongside real–world data exhibits from all major industries to become a one–stop reference for the estimation of international industry cost of capital.

The cost of capital is the expected rate of return for the purpose of attracting funds. The 2008 financial crisis exponentially increased the difficulty of estimation, and there is no ′one size fits all′ solution. This book helps you plan and execute the ideal cost of capital estimation for your particular target, with extensive data and references provided.

  • Get expert guidance on current methodologies and best practices
  • Perform accurate calculations for a broad range of financial statistics
  • Adjust for over 150 country– or region–specific risks
  • Access data from agriculture, manufacturing, transportation, services, and more

Cost of capital estimation has long been considered one of the most critical elements in business valuation, capital budgeting, feasibility studies, and merger and acquisition decisions. Risk plays a major role, and every division, asset, and project deserves a custom–tailored approach. 2015 International Valuation Handbook Industry Cost of Capital provides the globally–relevant, industry–specific, comparable numbers that make accurate estimation possible.

Note: Product cover images may vary from those shown

Acknowledgements ix

Introduction 1

Who Should Use the International Valuation Handbook Industry Cost of Capital 2

Industry–Level Cost of Capital Estimates 3

Industry–Level Statistics, Capital Structure, Valuation Multiples, and Betas 3

Methodology 4

Data Through Date 4

Countries of Incorporation 4

Company Type 4

Currencies Used 4

Global Areas Covered 5

Industry Identification by GICS Code 8

Minimum Number of Companies Required 9

Data Sources 9

Derivation of Long–term Risk–free Rates and Long–term Equity Risk Premia 12

Company Screening Process 15

Identifying Initial Company Sets 16

Additional Company Screening 17

Medians and Industry Composites 22

Latest and 5–Year Averages 24

Calculation of Industry Financial Statistics 30

GICS Code and Number of Companies in Main Set 30

Global Area and Currency 30

Graph Relative 5 –year Performance 30

Three Largest and Three Smallest Companies by Sales and Total Assets 30

Annualized Monthly Performance Statistics 30

Number of Companies in the Median, the Composites, and the High–Financial–Risk Category 32

Return Ratios 33

Liquidity Ratio 37

Profitability Ratio 38

Graph Operating Margin 38

Beta Overview 39

Levered Betas 40

Adjusted Betas 44

Graph Betas (Levered) 46

Unlevered Betas 47

Leverage Ratios 48

Graph Capital Structure, GICS Composite 52

Derivation of Long–term Growth Rates 52

Equity Valuation Multiples 53

Enterprise Valuation (E V) Multiples 57

Graph Enterprise Valuation Multiples 62

Long–term Risk–free Rates and Long–term Equity Risk Premia 63

Cost of Capital Estimates 64


Discounted Cash Flow (DCF) Models 67

1–Stage DCF 67

3–Stage DCF 68

Cost of Debt 71

Weighted Average Cost of Capital (WACC) 75

WACC Calculations 78

WACC Graph 79

Appendix A

Definitions of Standard & Poor s Global Vantage Database Data Items Used in Calculations

Industry Data Exhibits

World Company Set

Industry Data Exhibit 1: World Company Set, in EUR

Industry Data Exhibit 2: World Company Set, in £ GBP

Industry Data Exhibit 3: World Company Set, in $ USD

European Company Set

Industry Data Exhibit 4: European Union, in EUR

Industry Data Exhibit 5: European Union, in £ GBP

Industry Data Exhibit 6: European Union, in $ USD

Eurozone Company Set

Industry Data Exhibit 7: Eurozone, in EUR

Industry Data Exhibit 8: Eurozone, in £ GBP

Industry Data Exhibit 9: Eurozone, in $ USD

United Kingdom Set

Industry Data Exhibit 10: United Kingdom, in EUR

Industry Data Exhibit 11: United Kingdom, in £ GBP

Industry Data Exhibit 12: United Kingdom, in $ USD

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Roger J. Grabowski, Managing Director of Duff &Phelps LLC, is a major speaker at conferences and has testified in court as an expert witness on the value of closely held businesses and business interests, matters of solvency, valuation and amortization of intangible assets and other valuation issues. Roger authors the annual Duff& Phelps′ Risk Premium Report.

James P. Harrington, Director in the Office of Professional Practice at Duff & Phelps, is an accomplished financial writer and analyst. He provides technical support on client engagements involving cost of capital and business valuation matters, and leads efforts for development of Duff &Phelps′ studies, surveys, online content and tools, and internal models.

Carla Nunes, Director in the Office of Professional Practice of Duff & Phelps LLC, provides firmwide technical guidance on a variety of valuation, financial and tax reporting issues. She has directed multiple valuation assignments for a wide range of industries, including pharmaceutical, biotechnology, healthcare, vitamin retail, specialty chemicals, industrial manufacturing, and gaming and hospitality.

Note: Product cover images may vary from those shown