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2016 Valuation Handbook – Industry Cost of Capital. Wiley Finance

  • ID: 3904949
  • Book
  • 336 Pages
  • John Wiley and Sons Ltd
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The most recent cost of capital data for approximately 180 U.S. industries, identified by Standard Industrial Classification (SIC) code.

The 2016 Valuation Handbook Industry Cost of Capital provides valuation professionals with the same type of rigorous industry–level analysis previously published in the green–cover Morningstar/Ibbotson Cost of Capital Yearbook (now discontinued).

Using the most recent, up–to–date data is critical. The 2016 Valuation Handbook Industry Cost of Capital provides up–to–date data as it is updated annually (with data through March), and includes three intra–year Quarterly Updates (June, September, and December; Quarterly Updates are (i) optional, and (ii) not sold separately). The new 2016 edition of the book is updated with data through March 31, 2016 (the prior 2014 and 2015 editions are also available, with data through March 31, 2014 and March 31, 2015, respectively).

The 2016 Valuation Handbook Industry Cost of Capital provides up to eight (8) cost of equity capital and weighted average cost of capital (WACC) estimates for each of the U.S. industries covered in the book, plus capital structure, valuation (trading) multiples, sales, market capitalization, capital structure, several levered and unlevered beta estimates (e.g. ordinary–least squares (OLS) beta, sum beta, downside beta, etc.), financial and profitability ratios, equity returns, aggregate forward–looking earnings–per–share (EPS) growth rates, and more.

For more information about Duff & Phelps valuation data resources published by Wiley, please visit

Key Features

- Access cost of capital estimates and betas for approximately 180 U.S. industries.
- Reference industry–level valuation multiples, growth rates, sales, capital structure, profitability ratios, plus statistics that enable the user to gauge the impact of 'debt–like' off–balance sheet items on the capital structure of the subject industry.
- Use the information in this book to (i) benchmark, (ii) augment, and (iii) provide additional support for your own custom analyses of the industry in which a subject business, business ownership interest, security, or intangible asset resides.
- Ensure that you are using the most up–to–date information available by adding the intra–year Quarterly Updates.
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Acknowledgements x

Introduction 1

Who Should Use the Valuation Handbook Industry Cost of Capital 1

Industry–Level Cost of Capital Estimates 2

Industry–Level Statistics, Capital Structure, Valuation Multiples, and Betas 2

Analysis of Capital Structure Including Off–Balance–Sheet Liabilities 3

New in the 2016 Valuation Handbook Industry Cost of Capital 3

Methodology 5

Data Through Date 5

County of Incorporation 5

Company Type 5

Industry Identification by SIC Code 5

Minimum Number of Companies Required 6

Data Sources 6

Company Screening Process 11

Medians and Industry Composites 16

Latest and 5–Year Averages 18

Calculations of Industry Financial Statistics 24

Three Largest and Three Smallest Companies by Sales and Total Assets 24

Annualized Monthly Performance Statistics 24

Number of Companies in the Median, the Composites, and the High–Financial–Risk Category 25

Return Ratios 26

Liquidity Ratio 30

Profitability Ratio 31

Growth Rates 32

Beta Overview 33

Levered Betas 34

Adjusted Betas 37

Unlevered Betas 39

Equity Valuation Multiples 41

Enterprise Valuation (EV) Multiples 44

Fama–French (F–F) 5–Factor Model 50

Cost of Debt 53

Leverage Ratios 54

Cost of Equity Capital Estimates 58

CAPM 59

Cost of Equity Capital Estimates – Using the CRSP Deciles Size Study 61

CAPM + Size Premium 61

Build–up Method 63

Cost of Equity Capital Estimates – Using the Risk Premium Report Study 65

CAPM + Size Premium 66

Build–up 1 Method 68

Discounted Cash Flow (DCF) Models 71

1–Stage DCF 71

3–Stage DCF 72

Fama–French (F–F) 5–Factor Model 76

Weighted Average Cost of Capital (WACC) 78

WACC Calculations 81

Exhibit 11: Distribution of Company–level Average WACC by Industry 84

Exhibit 12: Average and Median of Company–level Average WACC by Industry for Healthy Companies and High–Financial–Risk Companies 85

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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.

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