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Adjusted Total Debt – Valuation Adjustment

Thursday, August 15th, 2013 NewConstructs_adjustedtotaldebt

The fair value of a company’s total debt is the current amount the company would need to pay to retire the debt and settle the claims of the creditors. This fair value of debt is subtracted from shareholder value because the firm would need to settle these claims before it could return any cash to shareholders.

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Preferred Stock – Valuation Adjustment

Wednesday, August 14th, 2013 PreferredStock

Preferred stock is a hybrid instrument that carries no voting rights but has a senior claim on assets and cash flows to common stock. Dividends usually must be paid out to preferred stock owners before common stock owners can receive any money. In the event of liquidation, preferred shareholders also have priority.

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Outstanding Employee Stock Options – Valuation Adjustment

Tuesday, August 13th, 2013 ESOliability_adjustment

Without careful footnotes research, investors would never know the amount of employee stock options that decrease the amount of future cash flow available to shareholders by diluting the value of existing shares.

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Time To Dig In To McDonalds (MCD)

Tuesday, November 13th, 2012 MCD_fig3a

When McDonalds (MCD) made my Most Attractive Stocks list this month, I must admit I let out a small cheer. This company is one of the better-run businesses in the world. I have long eyed the stock in hopes that it would get cheap enough to dig into and now it has.

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Definition: Price-To-EBV, or Price to Economic Book Value ratio

Monday, June 18th, 2012 PEBV_chart

The difference between the stock price and Economic Book Value (EBV) of s stock measures the difference between the market’s expectation for future profits and the no-growth value of the stock.

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Blue-Light Special: Wal-Mart Stock

Tuesday, June 28th, 2011 Wal-Mart's Economic book value

If you are looking for a good, safe stock in this volatile market, Wal-Mart is one of the best.

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