Company Valuation: A Guide for Analysts, Investors, and CEOs
What you’ll learn
- Understand operating and non-operating items.
- Derive adjusted income measures such as NOPLAT.
- Identify the invested capital.
- Adjust for off-balance sheet items.
- Conduct a discounted cash flow analysis (DCF).
- Adjust financial statements.
- Calculate optimal levels of debt.
- Understand tax shields.
- Use multiples and assess market expectations.
- Know the limitations of company valuation (startups, banks etc.).
- Estimate synergies and screen for targets.
This course provides a complete introduction to company valuation using discounted cash flow models, multiples, and asset-based valuation methods. We start with financial statement analysis and derive value drivers. After discussing some initial adjustments to financial statements, we derive net operating income, adjust for taxes, and determine the invested capital. Finally, we explore methods to forecast free cash flows. The discount rate, cost of capital, is estimated.
Using Excel, we build a discounted cash flow model (DCF) and value several companies throughout the course. Finally, alternative methods including multiples and asset-based valuation in the case of oil, gas & mining companies are introduced. Difficult cases such as startups, banks, and real estate businesses are valued applying modified approaches. To understand the potential of startups, our approach focuses on analysing their business model and market structure (e.g., network effects).
Apart from valuing a company from the inside-out, we look at market valuations and derive market expectations. These methods include share price decompositions and implied growth rates. These are useful tools to detect over or undervalued companies.
This course includes four assignment with detailed instructions and solution videos. The course does not require any prior knowledge of Excel or finance. Each concept will be introduced, explained in detail, and applied to real-life cases. These methods have been used in many settings during my time at McKinsey and working on various valuation problems.
Who this course is for:
- Analysts (beginner to advanced)
- Investors
- CEOs
- Small business owners
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