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Accounting for Value (Columbia Business School Publishing) by [Penman, Stephen]
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Accounting for Value (Columbia Business School Publishing) Kindle Edition

4.7 out of 5 stars 3 customer reviews

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Length: 266 pages Word Wise: Enabled Enhanced Typesetting: Enabled
Page Flip: Enabled Language: English

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Review

Penman's book...contains gems on every page - to the point that no one who deals with the market in any capacity should pass by this text until they have committed to memory as many points therein as their limited, mark one, human brains, can hold. -- Anthony Harrington QFinance Blog I highly recommend the essential and fundamentals oriented book Accounting for Value by Stephen Penman, to anyone who is serious about investing in sound, fundamental stocks. This book will benefit the beginning or experienced investor, accountants, and anyone interested in the coupling of accounting with equity valuation. Blog Business World For a practical book that will help you understand the use of accounting in understanding stock valuation, Accounting for Value is the resource you are looking for you. Stocker Blog

Product Description

Despite their skills and extensive training, many analysts fail to recognize the basics of good accounting and its deployment in valuation. By focusing on abstract concepts such as measurement basis, exit values, and entity concepts, they miss out on the benfits of a practical approach to valuation. While modern finance has advanced important concepts, including diversification and risk measurement, effective and efficient accounting merges these tools with fundamental analysis to divine a true account of value.

Launching an innovative examination of equity valuation as a matter of accounting, Stephen Penman embraces the commonsense ideas of fundamentalists& mdash;good firms can be bad guys, the risk in investing is the risk of paying too much, ignore information at your own peril, beware of paying too much for growth& mdash;and combines them with the principles of modern finance to reestablish the parameters of good analysis. The result anchors the investor, guards against behavioral biases, and challenges speculation. Penman compares fair-value accounting and historical-cost accounting; describes the anchoring of cash flows, book value, and earnings; and details the failure of modern finance to correctly assess value. He concludes with fundamental strategies for accounting for value and a bold proposal for assessing the cost of capital. Altogether, Penman's text is an essential tool for interpreting the greatest financial challenges of our time: the stock market bubble of the 1990s, the credit crisis of 2008, and accounting in the wake of ongoing market instability.


Product details

  • Format: Kindle Edition
  • File Size: 13301 KB
  • Print Length: 266 pages
  • Publisher: Columbia University Press (5 February 2011)
  • Sold by: Amazon Asia-Pacific Holdings Private Limited
  • Language: English
  • ASIN: B0060LSSSE
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Screen Reader: Supported
  • Enhanced Typesetting: Enabled
  • Average Customer Review: 4.7 out of 5 stars 3 customer reviews
  • Amazon Bestsellers Rank: #85,940 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Format: Hardcover Verified Purchase
This is content rich book suitable only for serious and advanced investors. It is not an easy read. The author is not great writer. I have read his other book also and that falls in same category. One example...He uses different abbreviations than industry. For example ROCE is Return on common equity Not return on capital employed. Penman is advocate of use of regular accounting for valuation. This is marked departure from other value investors who use free cash flow for valuation. But his methods will help you avoid paying too much for stocks and lose money. He asks us to anchor the valuation on what is known (current statements) and very reluctantly and conservatively value (and pay for) future growth.
I have been using his residual earnings valuation method for some time with very satisfying results. The key is extreme conservatism and common sense. And willingness to pass many good (in hindsight of course) opportunities. I recommend this book along with his Financial statement analysis and valuation Textbook.
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Format: Hardcover Verified Purchase
It is well written book on valuations. I highly recommend this book to everyone looking to understand "How to Value a business?"
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Format: Hardcover Verified Purchase
Great book. Lots of insights. A must read for every investor. Gives accounting a new perspective. And remove fear for layman.
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Most Helpful Customer Reviews on Amazon.com (beta) (May include reviews from Early Reviewer Rewards Program)

Amazon.com: 4.6 out of 5 stars 19 reviews
5 of 5 people found the following review helpful
4.0 out of 5 stars An interesting complement to the finance valuation perspective 23 November 2012
By Jackal - Published on Amazon.com
Format: Hardcover Verified Purchase
This is an interesting complement to Valuation: Measuring and Managing the Value of Companies, 5th Edition (Wiley Finance), which presents a finance perspective on valuation (read cash flow). The current book presents an accounting perspective on valuation. The writing style is not totally clear and I've seen some articles in Financial Analysts Journal by the same author that are more clearly written. Still this book will give you a lot of interesting ideas if you are professional engaged in valuation of mostly listed companies.
5.0 out of 5 stars Excellent book 18 May 2017
By P. Kim - Published on Amazon.com
Format: Hardcover Verified Purchase
Excellent book about using accounting information for valuation.

I highly recommend read this book with Damodaran's valuation books.

This will give you immense insights.
1 of 1 people found the following review helpful
5.0 out of 5 stars Foundation for the right approach to analysis 9 November 2014
By Jake Alister - Published on Amazon.com
Format: Hardcover Verified Purchase
Excellent companion to the Professor Penman's textbook. Biggest lesson: clearly define and separate the known from the assumed, and anchor on the former. This book will make you a more conservative analyst/investor.
5.0 out of 5 stars Nice read 28 January 2017
By efthymios-marios theodoropoulos - Published on Amazon.com
Format: Kindle Edition Verified Purchase
Interesting and not too technical, common sense accounting principles in order to invest sensibly using financial statements and annual reports.
4.0 out of 5 stars Some good points about earnings and balance sheets 26 June 2015
By L. Staub - Published on Amazon.com
Format: Kindle Edition Verified Purchase
Some good points about earnings and balance sheets, I just wish the author did not throw the cash-flow statements down the drain, they are a very useful piece of information. Companies issue these statements, why not analyse them as well?
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