Using the Residual-Income Stock Price Valuation Model to Teach and Learn Ratio Analysis-Reference-Cited by-同舟云学术

Using the Residual-Income Stock Price Valuation Model to Teach and Learn Ratio Analysis

Published:2001-05-01 Issue:2 Volume:16 Page:257-272
ISSN:0739-3172
Container-title:Issues in Accounting Education
language:en
Short-container-title:

Author:

Halsey Robert F.¹

Affiliation:

1. Babson College.

Abstract

This article provides an overview of the residual-income stock price valuation model and demonstrates its use in interpreting the DuPont return on equity (ROE) decomposition. The model provides theoretical support for the DuPont model's focus on ROE and aids in understanding the implications of the price-to-book and price-earnings ratios. I conclude with an application of the model in the valuation of Nordstrom, Inc.

Publisher

American Accounting Association

Subject

Education,Accounting

Link

http://meridian.allenpress.com/iae/article-pdf/16/2/257/1729235/iace_2001_16_2_257.pdf

Reference30 articles.

1. Bernard, V. 1994. Accounting-based valuation models, determinants of markto-book ratios, and implications for financial statement analysis. Working paper, University of Michigan.

2. The Feltham-Ohlson Framework: Implications for Empiricists

3. Damodaran, A. 1994. Damodaran on Valuation: Security Analysis for Investment and Corporate Finance. New York, NY: John Wiley & Sons, Inc.

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