Research On Equity Value Evaluation Based On Residual Income Ratio Model In ZD Company

Since the maximization of enterprise value has been recognized as the core goal of modern enterprise financial management,investors and enterprise managers have paid more and more attention to the value added of enterprises.The valuation of listed companies has become the most important part of securities analysis.In the past,most of the literature uses the discounted cash flow model(DCF)to evaluate the ability of enterprise’s operating assets to create value.In recent years,a direct value assessment model,the residual income model(RIV),has received more and more attention because it has advantages including the superiority of its theory and its wide range of application.This dissertation takes ZD as the target company to analyze,and adopts a single case study method researching the equity value of ZD with the improved residual income ratio model(RIR).The dissertation is divided into six sections.The first section is the introduction.It introduces the background and significance of the equity value evaluation in ZD company.It’s also about the research status of domestic and foreign scholars on the residual income model,as well as the ideas and methods of the research,innovation and characteristics of this dissertation.The second section elaborates the important concepts and related theoretical foundations of equity valuation with the residual income ratio model.The third section analyzes the business status,business environment and financial status of ZD company.In the fourth section,firstly,it selects the residual income ratio model to study the equity value.Then the DuPont analysis system is introduced into the original residual income model to derive the improved residual income ratio model.Next,this section evaluates the equity value of ZD company.Finally,it does sensitivity analysis.The fifth section is the problems that should be paid attention to in the process of evaluating with the residual income ratio model.The sixth section is the research conclusion and future prospects.Through the above research,three conclusions are drawn as follows:the residual income ratio model is applicable to the equity value evaluation of the rubber parts manufacturing industry;share price of ZD company is indeed undervalued by the market,and the decision of company’s management to repurchase equity is correct;the equity value of ZD company is most sensitive to the cost of capital.The research of this dissertation is helpful for investors to use the appropriate model about enterprise value assessment to make investment decision;it is helpful for managements to understand the enterprise value deeply and adjust the business strategy in a timely manner.At the same time,this dissertation has reference significance for the research on the equity value of other companies in the rubber parts manufacturing industry,and enrich the enterprise value evaluation theory because it provides reference for companies in other industries that are similar to the ZD company in business status.