18
DATA PRESSENTATION AND ANALYSIS Residual earnings valuation model 𝑽
𝟎
𝑬
= 𝑪𝑺𝑬
𝟎
+ ∑
𝝆
𝑬
−𝒕
[
∞
𝒕=𝟏
𝑪𝑵𝑰
𝒕
̅̅̅̅̅̅̅ − (𝝆
𝑬
− 𝟏)𝑪𝑺𝑬
𝒕−𝟏
]
̅̅̅̅̅̅̅̅̅̅̅………
1
…………………………………………….2
……………………………………………………………3 Where V
= value of a share of stock today (t = 0)
BV
0
= current per-share book value of equity
B
t
= expected per-share book value of equity at anytime tr required rate of return on equity (cost of equity)
Et = expected earnings per share for period t
RI
t
= expected
per-share residual income, equal to Et − rBt-1 or to (ROE − r) × Bt-1
ṃ= time frame or period
𝑽
𝟑
=
𝟏𝟐𝟕𝟕𝟖
𝟏𝟎. 𝟕𝟖(𝟏 + 𝟎. 𝟓)
+ ∑
𝟎. 𝟏
(𝟏 + 𝟎. 𝟒)
𝒕
𝟑
𝒕=𝟏
=$11.03 Due to the abandonment of multicurrency system we have to factor in inflation rate, risk free rate to discount the amount.
Gross Profit Margin: compares gross profit to sales revenue. This shows how much a business is earning, taking into account the needed costs to produce its goods and services. A high gross Electronic copy available at https://ssrn.com/abstract=3521211
19 profit margin ratio reflects a higher
efficiency of core operations, meaning it can still cover operating expenses, fixed costs, dividends,
and depreciation, while also providing net earnings to the business. On the other hand, a low profit margin indicates a high cost of goods sold, which can be attributed to adverse purchasing policies,
low selling prices, low sales, stiff market competition, or wrong sales promotion policies. This ratio is given by
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