The ROE Model and Firm Valuation

Estimated Time: 1.5 hours


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In The ROE Model and Firm Valuation, Dr. Pratt offers an overview of the time value of money by emphasizing concepts like the internal rate of return. However, he moves further to discuss shareholder value and other important functions, the end of which is analyzing the current market value of Best Buy, an established chain store. Ultimately, this all helps guide learners in understanding the importance of focused attention on the part of management and how it increases overall company value. Course Type: Video. Worth 2 PDCs (SHRM) and 2 CEUs (HRCI Business Credit).


2 PDCs
2 CEUs
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Learning Objectives

  • Use the concept of interest and time value of money
  • Define value creation
  • Link value creation to return on equity and how it is affected by management's operating, investing, and financing decisions
  • Use a spreadsheet-based valuation model using ROE inputs
  • Compute the inherent value of Best Buy
  • Describe how this valuation framework should be interpreted and used, which includes conducting sensitivity analysis on the model's key inputs

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SHRM: VTR is recognized by SHRM to offer SHRM-CP or SHRM-SCP professional development credits (PDCs). This program is valid for 2 PDCs. For more information about certification or recertification, please visit

HRCI: VTR is a recognized provider of recertification credits. HR Certification Institute® preapproved this program for 2 credits toward aPHR™, PHR™, PHRca™, SPHR™, GPHR™, PHRi™, and SPHRi™ recertification.