Roper Industries Inc.

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IÉSEG – School of Management Firm Valuation | Roper Industries Inc. | (NYSE:ROP) Technical Report | | This exercise represent an attempt at evaluating the value of the firm Roper Industries Inc. As many stocks have experienced important market corrections during this past few months, we'll estimate the true value of the firm by defining its main constituents. It is important to keep in mind that this evaluation is conducted in November 2009, where there is still many troubled indicators in the market following the turmoil that we knew last year. The current valuation might then be very temporary as well as the assumptions made in the document. This document discuss the assumptions made while building the excel spreadsheet "ROP - Spreadsheet.xlsx", and this file should be read with the current document to understand the different computations. The essay will then conclude by an analysis of the results. Valuation Technique The valuation technique used in this exercise is the Discounted Cash Flow (DCF). This technique will give us an estimate of the true value of Roper Industries based on the future cash flows of the company and a consistent cost of capital. As we face a firm founded in the late 1800's, listed on the New York Stock Exchange since 1992 and with relatively stable results during the previous exercises, the method should generate proper valuation in regards of the assumptions made to estimate the different parameters presented here. Cost of capital As Roper Industries uses a mix of equity and debt to finance its acitivities, the cost of capital will be calculated as a weighted average of the various sources of funding. No cost of preferred stock will be calculated as it is not used by the firm. Risk-free rate The first element that we need to evaluate in order to calculate the cost of capital is the risk free rate. To do so,

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