In this class, we started by using the dividend assessment process of looking at FCFE/cash return and then gauging trust in management, using the companies that we have used as lab experiments in the class (Vale in 2013, Tata Motors in 2013) and peer group analysis. In the process, we looked at why it is so difficult to get out of a dysfunctional dividend policy, as control trumps sanity and worries about the short term and peer group comparable delay action. We then started on valuation as the place where all of the pieces of corporate finance come together - the end game for your investment, financing and dividend decisions. We then looked at how these numbers can be different depending on whether you take an equity or firm perspective to valuation and what causes these numbers to change. Ultimately, though, the best way to learn valuation is by playing with the numbers and seeing how value changes. Finally, I have a spreadsheet that is versatile enough to cover every company in this class. Please use it for your valuation:
www.stern.nyu.edu/~adamodar/pc...
If you need some guidance on using this spreadsheet, try this KZfaq video that I put together for the Motley Fool early last year:
• Valuation Modeling: Ex...
I am sorry but I was a little hoarse when I did this, but I think I made it through to the end. Many of the inputs that you need for this spreadsheet should have already have been estimated or looked up for other parts of the project. Also, as you enter the key numbers for revenue growth, target operating margin and sales/invested capital, think of the story that drives these numbers. I know that you may find this to be a bit of a black box at the moment, but given that time is of the essence, I thought it would not make sense for you to be building up your excel skills at the moment.
Slides: pages.stern.nyu.edu/~adamodar...
Post class test: pages.stern.nyu.edu/~adamodar...
Post class test solution: pages.stern.nyu.edu/~adamodar...