Errata for Business Analysis and Valuation Third IFRS Edition

Last updated December 11, 2013.

1. On page 144, item 2, third sentence:
Change December 31, 2008 to December 31, 2011.
2. On page 187, in the equation defining ROE:
Change
= Return on business assets
(Return on business assets Effective interest rate after tax)Financial leverage
= Return on business assets Spread Financial leverage
To
= Return on business assets
+ (Return on business assets Effective interest rate after tax)Financial leverage
= Return on business assets + Spread Financial leverage
3. On page 188, in Table 5.4:
-

In the row labeled x financial leverage and the column labeled H&M2010,
change 1.11 to 1.12
In the row labeled = Financial leverage gain and the column labeled
H&M2010, change 21.8% to 21.9%
In the row labeled ROE = gain and the column labeled H&M2010, change
44.0% to 44.1%

4. On page 189, change its debt as a percent of its equity was 111 percent. Both these
factors contributed to a net increment of 21.8 percent to its ROE. Thus, while H&Ms
return on business assets in 2011 was 22.2 percent, its ROE was 44.0 percent. to its
debt as a percent of its equity was 112 percent. Both these factors contributed to a net
increment of 21.9 percent to its ROE. Thus, while H&Ms return on business assets in
2011 was 22.2 percent, its ROE was 44.1 percent.
5. On page 198, in Table 5.8:
-

In the row labeled Liabilities-to-equity and the column labeled H&M2010,

change 1.44 to 1.45
In the row labeled Debt-to-equity and the column labeled H&M2010, change
1.11 to 1.12

6. On page 279, the equation defining equity value as a function of future dividends
should be:
Equity value 0

Dividend 1

(1 + re )

Dividend 2
2

(1 + re )

Dividend 3

(1 + re )3

+K

7. On page 282, in the table presenting the abnormal earnings model:

Earnings in year 1 is 20m, not -20m
The cumulative PV of abnormal earnings is 62.8, not 62.38
8. On page 286, under item 4c: change -2.0 (AEG2014) to -21.0.

Updated excerpts from H&Ms balance sheets (original, standardized, and condensed pages
216 222) [Corrections have been highlighted]
CONSOLIDATED BALANCE SHEETS (SEK millions)
Fiscal year ended November 30
ASSETS

Total assets

2011

2010

2009

60,188

59,182

54,363

377
0
950
1,327

257
0
906
1,163

254
368
2,038
2,660

Total liabilities and shareholders' equity

60,188
Source: 2011 and 2010 Annual Report, Hennes & Mauritz AB.

59,182

54,363

LIABILITIES AND SHAREHOLDERS EQUITY

Provisions for pensions

Other provisions
Deferred tax liabilities
Total noncurrent liabilities

STANDARDIZED AND ADJUSTED BALANCE SHEETS (SEK millions)

Fiscal year ended November 30
ASSETS

Total Assets
LIABILITIES AND SHAREHOLDERS' EQUITY

Non-Current Debt
Deferred Tax Liabilities
Derivatives Liability
Other Non-Current Liabilities (non interest
bearing)
Non-Current Liabilities

Total Liabilities and Shareholders' Equity

Source: Authors calculations.

2011

2010

2009

110,151.5 106,619.5

100,748

50,340.5
950
150

47,694.5
906
176

47,007
2,038
335

0
51,440.5

0
48,776.5

0
49,380

110,151.5 106,619.5

100,748

CONDENSED BALANCE SHEETS (SEK millions)

Fiscal year ended November 30

2011

2010

2009

= Total Business Assets

94,444.5

91,866.5

87,620.0

Ending Debt
Current debt
+ Non-current debt
+ Preference shares
= Ending Debt

0.0
50,340.5
0.0
50,340.5

0.0
47,694.5
0.0
47,694.5

0.0
47,007.0
0.0
47,007.0

94,444.5

91,866.5

87,620.0

= Total Capital
Source: Authors calculations.