Timanco S.A.: Unpaid Taxes, Losses Carried Forward, Foreign Debt, Presumptive Income and Adjustment for Inflation. The Treatment with Dcf and Eva(C) (in Spanish)
36 Pages Posted: 5 Sep 2003 Last revised: 23 Jun 2009
Date Written: March 10, 2004
Velez-Pareja and Tham (2003) presented a method to match the value added approaches (Residual Income Method, RIM and Economic Valor Added, EVA) with the discounted cash flow, DCF methods. There they used a relatively complex example, but yet, far away from reality. In this note we use a real life case from an emerging country to illustrate the same procedure, but with additional and real life complexities such as unpaid taxes, losses carried forward, foreign exchange debt, presumptive income and inflation adjustments to the financial statements. In all methods we use market values to calculate the discount rates.
We stress what Velez-Pareja 1999 and Fernandez 2002 have said: for a single period, RI or EVA does not measure valor. We have to include expectations and market values in the calculation of discount rates and hence values.
Note: Downloadable paper is in Spanish.
Keywords: Economic Value Added, EVA, Market Value Added, MVA, residual income model, utilidad, economica, valor presente neto (VPN), flujos de cja, flujos de caja libre, valor de Mercado del patrimonio, valor de la firma, perdidas amortizadas, losses carried forward, perdida en cambio, deuda en moneda etanjera, foreign exchange loss, foreign exchange debt, renta presuntiva, presumptive income, ajustes por inflacion a los estados financieros, inflation adjustments to the financial statements
JEL Classification: M21, M40, M46, M41, G12, G31, J33
Suggested Citation: Suggested Citation