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The Valuation Accuracy Of The Price-Earnings And Price-Book Benchmark Valuation Methods, C. S. Cheng, Ray Mcnamara
The Valuation Accuracy Of The Price-Earnings And Price-Book Benchmark Valuation Methods, C. S. Cheng, Ray Mcnamara
Ray McNamara
This paper evaluates the valuation accuracy of the price-earnings (P/E), the price-book (P/B) and a combined price-earnings and price-book (P/E-P/B) benchmark valuation methods. Performance of the benchmark valuation methods relies on the definition of comparable firms. In this paper, comparable firms are selected based on industry membership, size and return on equity as well as combinations of industry membership with size and with return on equity. We find that within the P/E and P/B benchmark valuation methods, the best definition of the comparable firms are based on industry membership combined with return on equity. However, only the industry membership is …
Equity Valuation In The Coal Seam Gas Industry, Keith Duncan, Simone Kelly, Ray Mcnamara
Equity Valuation In The Coal Seam Gas Industry, Keith Duncan, Simone Kelly, Ray Mcnamara
Ray McNamara
The coal seam gas industry is an important and rapidly developing sector of the Australian mining industry and the economy as a whole. This sector provides an excellent site to test the relevance of the Hotelling Valuation Principle (HVP) in explaining the market capitalisation of this industry sector. In addition, the test enabled the test of which reserve classification best explains the market capitalisation of firms in the industry.Currently, the majority of listed firms in this sector do not have positive cash flows from the sale of gas. The HVP posits that market values are a function of company reserves. …
Assessing Solvency For Financially Distressed Companies, James Routledge, Ray Mcnamara
Assessing Solvency For Financially Distressed Companies, James Routledge, Ray Mcnamara
Ray McNamara
This article reviews past and recent authorities that have addressed the definition and application of the solvency test in s 95A of the Corporations Act 2001 (Cth). The discussion highlights that, when faced with financial distress, company directors need to carefully consider the solvency implications of their decisions. To generate cash to pay debts as they become due, directors may attempt to realise company assets, obtain additional secured or unsecured debt finance or reorganise the timing of payments with creditors. The discussion of relevant cases shows that the solvency implications associated with realisation of assets, use of assets as security …