Calculating the Jones model within Excel
Hi All,
I am hoping someone has experience in calculating the Jones Model, within Excel.
I have calculated the firm parameters:
α1 - Aτ-1
α2 - ∆REVτ
α3 - PPEτ
As well as accτ/Aτ-1
Where Aτ = Total Assets, ∆REV = Change in revenue, PPE = Gross property, plant and equipment and accτ = Total Accruals.
Total accruals has been defined as Net Income - Cash flow from operations.
I then regress the firm parameters against accτ/Aτ-1 to derive a residual value.
I feel i am missing something, is this literally all that needs to be done?