%0 Journal Article %1 scholze2010simple %A Scholze, Andreas %D 2010 %J BuR - Business Research %K Feltham-Ohlson analysis capital corporate cost debt equity financial framework income leverage of residual shield statement tax valuation %N 1 %P 37-47 %T A Simple Accounting-based Valuation Model for the Debt Tax Shield %U http://www.business-research.org/2010/1/accounting/2503/hihrig1274249781.28.pdf %V 3 %X This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.

@article{scholze2010simple, abstract = {This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.}, added-at = {2010-06-09T09:47:24.000+0200}, author = {Scholze, Andreas}, biburl = {https://www.bibsonomy.org/bibtex/297153f248103b9918c85307a1515813c/usbk}, interhash = {45101c18ec752be3fa64628363ef22c1}, intrahash = {97153f248103b9918c85307a1515813c}, journal = {BuR - Business Research}, keywords = {Feltham-Ohlson analysis capital corporate cost debt equity financial framework income leverage of residual shield statement tax valuation}, month = may, number = 1, pages = {37-47}, timestamp = {2010-06-09T09:47:24.000+0200}, title = {A Simple Accounting-based Valuation Model for the Debt Tax Shield}, url = {http://www.business-research.org/2010/1/accounting/2503/hihrig1274249781.28.pdf}, volume = 3, year = 2010 }