Company valuation: Combining Indirect Cash Flow Forecasts with Qualitative and Quantitative Measures: A Case Study of Pandora

Johannes Nøhr Pedersen & Oliver Ariel Olsen

Student thesis: Master thesis


The main objective of this thesis is to explore how econometrics related to indirect cash flows forecasting can be combined with qualitative and quantitative measures in order to estimate the value of a company. A combination of the fields within econometrics, finance and strategy enables us to come up with an alternative method compared to regular papers on valuation. The reformulated financial statements are forecasted using several ARIMA models based on the framework of Pohl (2017) to indirectly forecast the company’s cash flows in a 5-year explicit period, thus reaching the terminal period. Purely quantitative and statistically-based valuations are assessed to lack vital qualitative inputs, why Lorek (2013) develops a framework of which qualitative fine-tuning adjustments can be applied. In addition to fine-tuning the explicit forecast, a fading forecast period is applied, allowing the forecasted value drivers to reach the terminal period in a fading period of 20 years. The qualitative factors are identified in a strategic analysis, where the most relevant factors are found to be economic, technological as well as intensified competition. In order to reach a fading terminal forecast, the fading forecast period is quantified by an industry analysis which analyzes crucial measures of revenue growth, profit margin and asset turnover. The qualitative and quantitative measures are combined, resulting in a modified forecast. The result of the modified valuation has an increased accuracy with a share price of DKK 915.00. Even though the results have precise and well-founded realistic value attributes, the framework utilized in this paper is not deemed as viable mainly due to the increased complexity and time-consumption.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2018
Number of pages117
SupervisorsSøren Plesner