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

See all articles by Ignacio Velez-Pareja

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Joseph Tham

Duke University - Duke Center for International Development in the Sanford School of Public Policy; Academy of Public Administration under the President of the Republic of Kazakhstan

Date Written: March 10, 2004

Abstract

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

Velez-Pareja, Ignacio and Tham, Joseph, 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) (March 10, 2004). Available at SSRN: https://ssrn.com/abstract=438242 or http://dx.doi.org/10.2139/ssrn.438242

Ignacio Velez-Pareja (Contact Author)

Grupo Consultor CAV Capital Advisory & Valuation ( email )

Ave Miramar # 18-93 Apt 6A
Cartagena
Colombia
+573112333074 (Phone)

HOME PAGE: http://cashflow88.com/decisiones/decisiones.html

Joseph Tham

Duke University - Duke Center for International Development in the Sanford School of Public Policy ( email )

Box 90312
302, Towerview Dr, Rubenstein Hall, Room 272
Durham, NC 27708
United States
919-613-9234 (Phone)
919-681-0831 (Fax)

HOME PAGE: http://fds.duke.edu/db/Sanford/faculty/thamjx

Academy of Public Administration under the President of the Republic of Kazakhstan ( email )

Abay Street, 33a
Astana
Kazakhstan
+7 8 7172753422 (Phone)

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