Création de valeur

The value of any asset is a function of the cash flows generated by that asset, the life of the asset, the expected growth in the cash flows and the riskiness associated with the cash flows. Building on one of the first principles in finance, the value of an asset can be viewed as the present value of the expected cash flows on that asset.

If we view a firm as a collection of assets, this approach can be extended to value a firm, using cash flows to the firm over its life and a discount rate that reflects the collective risk of the firm's assets. This process is complicated by the fact that while some of the assets of a firm have already been made, and are thus assets-in-place, a significant component of firm value reflects expectations about future investments. Thus, to value a firm we need to measure not just the cash flows from investments already made, but also estimate the expected value from future growth. In the following section, we will consider some of the basic principles that should guide our estimates of cash flows, growth and discount rates.

The cash flow to the firm can be measured in two ways. One is to add up the cash flows to all of the different claim holders in the firm. Thus, the cash flows to equity investors (which take the form of dividends or stock buybacks) are added to the cash flows to debt holders (interest and net debt payments) to arrive at the cash flow

Another way of presenting the same equation is to cumulate the net capital expenditures and working capital change into one number, and state it as a percentage of the after-tax operating income. This ratio of reinvestment to after-tax operating income is called the reinvestment rate, and the free cash flow to the firm can be written as:

In valuation, it is the expected future cash flows that determine value. While the definition of the cash flow, described in the last section, still holds, it is the forecasts of earnings, net capital expenditures and working capital that will yield these cash flows. One of the most significant inputs into any valuation is the expected growth rate in operating income.

Both measures should be forward looking and the return on capital should represent the expected return on capital on future investments. Having said that, it is often based upon the firm's return on capital on assets in place, where the book value of capital is assumed to measure the capital invested in these assets. Implicitly, we assume then that the current accounting return on capital is a good measure of the true returns earned on assets in place, and that this return is a good proxy for returns that will be made on future investments.