Residual income valuation

We don't use the residual income method very much in SIMM, but it is part of the CFA so you should know it. It is most like the EVA method that we do cover. Why don't we use it? The problem with book value assumption given numerous tax-induced writedowns.

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    Residual income valuation

    Residual income valuation (RIV; also, residual income model and residual income method, RIM) is an approach to equity valuation that formally accounts for the cost of equity capital. Here, "residual" means in excess of any opportunity costs measured relative to the book value of Shareholders' equity; residual income (RI) is then the income generated by a firm after accounting for the true cost of capital.

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    Residual Income Powerpoint from the CFA Institute

    This is likely your best source of information on the Residual Income valuation model. It is a great powerpoint presentation. HIGHLY recommended! https://www.cfainstitute.org/learning/products/publications/inv/Documents/equity_chapter5.pptx

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    Residual Income Valuation Jerald E. Pinto, CFA, Elaine Henry, CFA, Thomas R. Robinson, CFA, and John D. Stowe, CFA

    Great lesson from CFA R esidual Income Valuation Jerald E. Pinto, CFA, Elaine Henry, CFA, Thomas R. Robinson, CFA, and John D. Stowe, CFA

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    Residual Income (RI) Valuation Model - Finance Train

    This approach starts with the current book value per share of equity today and discounts the expected value of future residual incomes. Companies with positive residual incomes should have market share prices that exceed the book value per share.

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    Residual Income Valuation (RIV)

    Residual income valuation ( RIV) which is also known as residual income method or residual income model (RIM) is an approach to or method of equity valuation which properly accounts for the cost of equity capital.

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    Residual Income Model (รศ.ดร.ภรศิษฐ์ จิราภรณ์)

    An on-line lecture for my course on Security Valuation at Penn State University. We are now taking applications for the Master of Finance program. http://www.personal.psu.edu/pxj11/index1.html

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    Valuing A Company Using The Residual Income Method | Investopedia

    "When most hear the term residual income, they think of excess cash or disposable income. Although that definition is correct in the scope of personal finance, in terms of equity valuation residual income is the income generated by a firm after accounting for the true cost of its capital. You might be asking, "but don't companies already account for their cost of capital in their interest expense?" Yes and no. Interest expense on the income statement only accounts for a firm's cost of its debt, ignoring its cost of equity, such as dividends payouts and other equity costs. Looking at the cost of equity another way, think of it as the shareholders' opportunity cost, or the required rate of return. The residual income model attempts to adjust a firm's future earnings estimates, to compensate for the equity cost and place a more accurate value to a firm. Although the return to equity holders is not a legal requirement like the return to bondholders, in order to attract investors firms must compensate them for the investment risk exposure. Read more: Valuing A Company Using The Residual Income Method | Investopedia http://www.investopedia.com/articles/fundamental-analysis/11/residual-income-model.asp#ixzz4DcvzQDo6 Follow us: Investopedia on Facebook"

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    Valuation models compared

    This video compares and reconciles the dividend discount model, the discounted cash flow model, and the residual income model (also commonly referred to as discounted abnormal earnings model).

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    R36 Residual Income Valuation Lecture 1

    Uploaded by Zeroinfy.com on 2015-10-14.

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    R36 Residual Income Valuation Lecture 2

    Uploaded by Zeroinfy.com on 2015-10-14.

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