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20 Cards in this Set
- Front
- Back
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Horizon premium
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The difference between the value and book value expected at a forecasted horizon. 155
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Implied earnings forecast
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A forecast of earnings that is implicit in the market price. 177
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Implied expected return
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The expected rate of return implicit in buying at the current market price. 175
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Implied residual earnings growth rate
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The perpetual growth in residual earnings that is implied by the current market price. 175
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Normal price-to-book ratio
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Applies when price is equal to book value, that is, the P/B ratio is 1.00. 153
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Residual earnings
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Comprehensive earnings less a charge against book value for required earnings. Also referred to as residual income, abnormal earnings, or excess profit. 150
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Residual earnings driver
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A measure that determines residual earnings; the two primary drivers are rate of return on common equity (ROCE) and growth in book value. 153
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Residual earnings model
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A model that measures value added to book value from forecasts of residual earnings. 151
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Steady-state condition
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A permanent condition in forecast amounts that determines a continuing value. 163
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Target price
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A price expected in the future. 164
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Terminal premium or horizon premium
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The premium at a forecast horizon (and is equal to the continuing value for the residual earnings valuation). 164
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The value of common equity
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pg 153
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Residual earnings
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pg 153
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Residual earnings
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pg. 156
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Simple valuation model
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pg 159
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Simple valuation case 1.
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pg 161
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Simple valuation case 2 valuation
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pg 163
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Simple valuation case 3 valuation
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pg 163
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Implied expected return
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pg 175
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Earnings forecast
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pg 177
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