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About LinkVBM |
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Benefits of using LinkVBM |
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Value based considerations |
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Graphic comparisons of key results |
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Valuations |
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Sensitivity |
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Target |
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COMPARISON |
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Download Demo |
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Purchase LinkVBM |
The power of LinkVBM reveals the secrets hidden within financial statements. You will be surprised how much they can tell you, if you use the right value based data and approach.
Statutory Accounts are Inappropriate(for making Management Decisions)
In leading Public Companies around the world it is becoming well known that Statutory Accounts are inappropriate for making management decisions.
Statutory Accounts
The Resulting Danger: Þ Managers risk
So what is the Answer?
by making incorrect investment decisions
Using LinkVBM you can
The result is that Managers can have REAL Value Based Management Accounts in order to
for their impact on share price
LinkVBM has the Answers
To see how easily you can manage for and effectively increase your share price, download a full demonstration version of this software
Click Here to Download Now
.
Value based adjustments consist of the following categories.
Statutory Account Adjustments
These adjustments are determined from data entered into the statutory Profit and Loss and Balance Sheet.
Additional Adjustments
These adjustments are entered separately to the statutory accounts and are not automatically able to be picked up from the statutory financial statements.
Operating Leases
These adjustments reflect the capital nature of off balance sheet funding for operations. The pattern of debt is entered together with a discount rate to determine the value of the operating leases to the company in terms of value.
There are many Value Based Accounting Adjustments that can be made. (E.g. treatment of research and development, write back of goodwill amortisation and provisions, revaluation of assets and non-recurring gains and losses)
LinkVBM is a Trade Mark of Economic Solutions (SA) Pty Ltd
The powerful, flexible and user defined Graphics features enable you to compare the key data fields for both the Value and the Statutory data.
VBA = Value Based Accounts
STAT= Statutory Accounts
Ecoonomic Value Added (EcnVA) can be changed to
Shareholder Value Added (SVA
Shareholder Wealth Created (SWC)
Cash Value Added (CVA)
Shareholder Value Created (SVC)
Also any of these names can be changed to a new or different name, through the edit menu
LinkVBM will calculate share price. You can use both Value Based Data and Statutory Data and compare the prices.
The LinkVBM System highlights the following key factors (Refer to diagram below):
Have you wondered how you could gain more control over your share price?
The following screen has been clipped from the "LinkVBM" Program.
Using 30th June 2000 as a start date and projecting data out a further 10 years it shows a Statutory Share Price of only $5.35 compared to a Value Based Share Price of $6.50.
Statutory refers to Accounts reported in the Annual Reports, obtained from applying Accounting Standards (available direct from your accounting system). Value Based refers to Accounts obtained from adjusting the Statutory Accounts for Economic factors (eg Operating leases) and reversal of Accounting entries that distort cash flow timing of which there are many. This is what the market uses to assess share price.
The "LinkVBM" program accomplishes the adjustment process automatically.
This is the difference between the Value of the Entity (calculated by using the Target Price multiplied by the Number of Shares on Hand as at the end of the last historical period) and the Value of the Entity (calculated by using the Price of the Entity calculated if the last historical
NOPAT is continued in Perpetuity multiplied by the Number of Shares on Hand as at the end of the last historical period).
If the market price is entered for the target price then VFG will be the difference between the Market Capitalisation and the Value of the Company if the last NOPAT continued in Perpetuity with no changes to Capital and WACC. This basically equates to the amount of Value that the Market is allocating to Future Growth.
Note: This field and the ones below it are only activated if a Target Price is entered in the Target screen. Also note that the calculations use the number of shares that exit as at the last historical period that has been entered into the file (i.e. the last period entered in the Profit and Loss screen). This may differ from the number of shares shown in the text box above this text box if the Start Date of the Settings screen is not the first period after the last historical period that has been entered into the file. Also the MVA here is the difference between the Market Value and the Value Based Capital as at the last historical period that has been entered into the file. This may differ from the MVA in the text box above which is determined from the start and end dates and the
relevant data for that period.
Capital Growth Premium% = (Value of Future Growth /Market Value)*100/1
= (139,840/615,046)*100/1
= 22.74
MVA Growth Premium% = (Value of Future Growth /Required Market Value Added)*100/1
= (139,840/353,669)*100/1
= 39.54%
NOPAT Indicator
The other interesting parameter is the "NOPAT
Indicator". "NOPAT Indicator" is the Percentage Increase (over a nominated
number of years) in Net Operating Profit After Tax that is required in order to achieve
the additional value of $139,840.
In order to achieve the additional value of $139,8400 this Company needs to increase its NOPAT by 3.956% each year for 10 years in a row and then maintain the final Net Operating Profit After Tax achieved at the end of this 10 year period into Perpetuity. This is assuming that its’ Cost of Capital and its Capital Employed stay constant at the same level (Company re-invests its depreciation and amortisation in Capital expenditure).
The following graph shows the historical cash flows (1996 to 2001) and also the Future Free Cash Flows (2002 to 2011) that are required to support the Share Price of $6.50. A share price of $6.50 requires a continuing increase in the Future Free Cash Flows. This analysis assists in making a judgment as to how feasible and realistic it is to achieve this continued increase.
Similarly Economic Value Added's (Historical and Future) can be used instead of Future Free Cash Flow. A continued positive increase in Economic Value Added as reflected in the following graph is required in order to maintain the $6.50 share price.
The main data fields of NOPAT, Capital and WACC% can be projected forward using the
projection, sensitivity or target screens. It is important to note that the NOPAT
and Capital fields are not integrated with each other. For example a change in NOPAT
assumes no change in Capital. If Capital is to change resulting from a change in NOPAT,
then you need to change Capital. Therefore you should not use the program for detailed
forward planning.
The intention and purpose of being able to project the key data forward in the above
manner is to be able to obtain a quick and approximate view of what levels of future
Economic Value Added or Free Cash Flow are required to support a particular Share Price. The
future levels required can be compared to the Historical levels by using the
"Graph" and/or "Report" functions.
Constant Projection means that for both the Value and Statutory data, the Capital is increased by the same percentage each year for the number of years that are chosen. Next Years Capital is Current Years Capital*(1+percentage increase for the current year). Similarly the percentage increases for NOPAT or EcRoce% (either one may be chosen) are constant. After you enter the number of years and respective percentage increases you click the "Project" button to project the data.
Specific Projection from Year End
Key data may be individually (each year) projected for up to 20 years by choosing the
"Specific projection from year end" option at the bottom of the screen. After
you enter the number of years you use the "Project" button to project the data
and to go into the "Specific Projection" screen. Whether NOPAT or EcRoce is
shown is determined from your selection on the "Projection" Screen. The main
data fields of NOPAT, Capital and WACC% can be projected forward using the projection,
sensitivity or target screens. It is important to note that the NOPAT and Capital
fields are not integrated with each other. For example a change in NOPAT assumes no change
in Capital. If Capital is to change resulting from a change in NOPAT, then you need to
change Capital. Therefore you should not use the program for detailed forward planning.
The intention and purpose of being able to project the key data forward in the above
manner is to be able to obtain a quick and approximate view of what levels of future
Economic Value Added or Free Cash Flow are required to support a particular Share Price.
The future levels required can be compared to the Historical levels by using the
"Graph" and/or "Report" functions.
If you enter the percentages the actual amounts are calculated and these amounts may be edited (this will over-write or re-calculate the percentages).
The data that is projected is added to the historical data set if you choose the OK button (the "Cancel" button cancels the operation). The combined data can be viewed under the "Report" Option".
WACC% and Number of Shares can be entered at the bottom of the screen and is specific
to both Value and Statutory Data.
The main data fields of NOPAT, Capital and WACC% can be projected forward using the
projection, sensitivity or target screens. It is important to note that the NOPAT
and Capital fields are not integrated with each other. For example a change in NOPAT
assumes no change in Capital. If Capital is to change resulting from a change in NOPAT,
then you need to change Capital. Therefore you should not use the program for detailed
forward planning.
The intention and purpose of being able to project the key data forward in the above
manner is to be able to obtain a quick and approximate view of what levels of future
Economic Value Added or Free Cash Flow are required to support a particular Share Price. The
future levels required can be compared to the Historical levels by using the
"Graph" and/or "Report" functions.
Enter the number of periods that you wish to project the data for. For example
enter 4 for the number of periods. The Start date is the first month after the last
historical period. In this example the last historical period is the year-ended
30/06/2001. Therefore the first month after this period is July 2001 and four periods later
makes the end date Jun2005. The current share price is the price using the above dates
(July2001 to Jun 2005) with No changes to the data.
The default percentage increase is 1% per period. This may be altered up or down to
whatever percentage increase or decrease that you require. When you enter a positive or
negative number in the percentage change text box, this progressively changes the NOPAT,
Capital and WACC% figures by that amount. The New Share Price is the price calculated with
all the changes to NOPAT, Capital and WACC% been taken into account.
The New Price for NOPAT, Capital and WACC% are the individual prices calculated assuming
no other parameters change (e.g. NOPAT increases by 1% per period and no changes to
Capital or WACC%) then the new price will be $5.16. If capital is to change as a result of
changes to NOPAT then you need to enter the respective changes for Capital. This will not
change the $5.16, being the New Price (text box) for NOPAT, but it will change the New
Price (text box) for Capital and will be reflected in the overall "New Share
Price".
The individual (text boxes) percentage changes may be overridden. For instance you could
set the Global %change default to 0, and the Capital change to 3% per period (unfavorable,
i.e. increase Capital by 3% each year) and NOPAT to 3.75% per period.
You choose this option by clicking on the "Target" tab on the Valuation
screen.
The main data fields of NOPAT, Capital and WACC% can be projected forward using the
projection, sensitivity or target screens. It is important to note that the NOPAT
and Capital fields are not integrated with each other. For example a change in NOPAT
assumes no change in Capital. If Capital is to change resulting from a change in NOPAT,
then you need to change Capital. Therefore you should not use the program for detailed
forward planning.
The intention and purpose of being able to project the key data forward in the above
manner is to be able to obtain a quick and approximate view of what levels of future
Economic Value Added or Free Cash Flow are required to support a particular Share Price. The
future levels required can be compared to the Historical levels by using the
"Graph" and/or "Report" functions.
Enter the number of periods that you wish to project the data for (up to 20
periods). For example enter 4 for the number of periods. The start date is the first month
after the last historical period. Using "CASE1A" the last historical period is
the year-ended 30/06/2001. Therefore the first month after this period is July 2001 and
four
periods later makes the end date June 2005. The current share price is the price using the
above dates (Jul2001 to Jun2005) with No changes being made to the historical data that is
projected forward.
Enter the Target Price in the Target Price Text Box. The "% Change
Required" boxes are then filled in by the program. They show the percentage change
that is needed to be made over the target period to each opening data field independent of
the other fields. For instance "%Change Required" NOPAT line shows the
percentage change required to NOPAT for each projected period in order to achieve the
Targeted Price. If the Target Price is not achievable (based on edit checks used) then
the respective Text Boxes will be filled in Red colour and locked.
Data may be entered in the Actual% text boxes. The program recalculates the individual
price and uses the data in all three white text boxes to recalculate the New Share Price. The
"%Change Required" boxes are then filled in by the program. They show the
percentage change that is needed to be made over the target period using the data entered
in the Actual% text boxes that do not correspond to the % Change Required box that is
being calculated.
For instance if we enter 1% in the "%Change Required" Capital text box, then the
percentage change per period that is required to be made to NOPAT in order to achieve the
Targeted Price is shown. This also takes into account the change entered into the Actual%
text box for the Wacc%, which in this case is nil. For instance in the above screen
instead of entering a negative 24.267578% change per period to Capital in the Actual% text
box we have entered a positive 1%. The effect of this is to reduce the Share Price from
$4.98 to $4.89 and this is shown in the corresponding "Individual Result" box.
As there are no other changes in the other Actual% Change boxes the New Share Price is
also $4.89. The percentage change required to be made to NOPAT in order to achieve the
Targeted Price is an increase of 8.143629% per period. Similarly if the Actual% Change to
Capital is an increase of 1% per period and the Actual% Change to NOPAT is nil, then the
%Change Required to WACC is --7.433698% per period.
Using the Comparison module you can compare the key fields for any number of files (companies). The comparison can be listed in ascending or descending order using either the "Premium Growth%" or the NOPAT Indicator%" fields.
The following screen shows the selection criteria.
The choices are as follows:-
Select companies (files) from the Company Listing
to compare, either by clicking on the Company (file) name, then click the
Transfer button (>), or double-click on the Company name. If you click on the
(>>) button all files in the database will be selected for comparison. You can
use the back arrow (<) key to deselect files that you highlight or the (<<) key
to deselect all files.
Once you have made your selection, click on the
"SELECT NOW" button to activate the selection process.
You can select any of the following combinations to select the files for comparison. Resident Country; Industry; No of Months; No of Periods (projected forward from last
Historical Period); Last Historical Year.
If you have chosen this method for selection then you must select at least one of the
choices here. Once you have made your selection, click on the "SELECT NOW"
button to activate the selection process.
The following feature is included in the full 32-bit program, but is not in the demonstration version:
- Link to Excel
The following functions are disabled on the evaluation version
Save/Save as
Print
Transfer
Import
Export
Link Capabilities
Audit Trail Details
The Download file size is approximately 19Mg
LinkVBM is available on a yearly rental basis. If you want more
details please email us with
LinkVBM Rental
in the title box
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