Adjusted present value
Traditional analysis using discounted cash flows finds a single value but does not provide detailed information on the constituents of value or the breakdown of constituents. Figure 14.1 shows the sources of potential value in terms of:
- current market value;
- internal improvements such as cost cutting and savings;
- external improvements such as liquidations, acquisitions, disposals and strategic improvements;
- financial engineering, which includes borrowing costs, changing leverage and lowering the cost of capital.
Figure 14.1 Value gap
Since you have all the ...