The author establishes that classic firm-valuation methods based on dividends (or equivalently free cash flows or residual income) can be modified to be based on any financial variable (V), such as sales, given V is cointegrated with the fundamental value (P) of the firm. The variable V (or a...

The author establishes that classic firm-valuation methods based on dividends (or equivalently free cash flows or residual income) can be modified to be based on any financial variable (V), such as sales, given V is cointegrated with the fundamental value (P) of the firm. The variable V (or a...

Determining the right or fair price of a stock is one of the oldest problems in finance. Business mergers and acquisitions rely on this information, but only in the last several decades have formal models been developed to address the question. This article focuses on fundamental valuation, a...