Aswath Damodaran. INVESTMENT VALUATION: SECOND EDITION. Chapter 1: Introduction to Valuation. 3. Chapter 2: Approaches to Valuation. Chapter 3. Equity Valuation: Models from Leading Investment Banks Aswath Damodaran INVESTMENT VALUATION Real Estate Market Valuation and wm-greece.info Library of Congress Cataloging-in-Publication Data: Damodaran, Aswath. Investment valuation: tools and techniques for determining the value of any asset .
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Chapter Outlines and overheads: These are saved as pdf files, and you need Web Casts: These are webcasts of the lectures from the valuation class that I. Aswath. Damodaran. 1. An Introduction to Valuation. Aswath Damodaran There have always been investors in financial markets who have argued that market. Aswath Damodaran. 1. Valuation: What is it: In discounted cash flow valuation, the value of an asset is and taxes, is called the cash flow to equity investors.
Solutions: The solutions to each chapter are at the end of each chapter in the web site below. Powerpoint Presentations: These are power point presentations that are designed for use by instructors. You will need the password to download these as well. Spreadsheets: These are spreadsheets that supplement the topic. They are in Microsoft Excel, and can be used on either a Mac or Windows system. Datasets: These are useful datasets to supplement each chapter. They generally include industry averages for key variables and represent updates on many of the tables in the book.
Web Casts: These are webcasts of the lectures from the valuation class that I teach at Stern. You can use the lecture notes and the text book to follow the lectures. You can read the preface to the book by clicking here. If you are an instructor using this book, click here. Valuing a firm with the APV approach: Crew Illustration This spreadsheet allows you to estimate the value of a firm using the FCFF approach.
This spreadsheet allows you to compute the optimal debt ratio firm value for any firm, using the same information used for Boeing. It has updated interest coverage ratios and default spreads built in apv. This spreadsheet allows you to compute the value of a firm, with leverage, using the adjusted present value approach. Comparing PE ratios and growth rates across firms: Beverage Companies Illustration Revisiting the Beverage Sector: Sector Regression.
Estimating the PE ratio for a high growth firm in the two-stage model Illustration Estimating a Fundamental PE ratio Illustration PE Ratios across time Illustration PE Ratios in markets with different fundamentals Illustration Comparing PE ratios across markets Illustration An Example with Emerging Markets Illustration Comparing PE ratios for Global telecomm firms Illustration Valuing Procter and Gamble using the market regression Illustration Estimating the PEG ratio for a firm Illustration Comparing Relative PE ratios for automobile stocks Illustration Steel companies.
Estimating the PBV ratio for a stable firm Illustration Estimating the price-book value ratio for a 'privatization' candidate - Jenapharm Germany Illustration Estimating the PBV ratio for a high growth firm in the two-stage model Illustration Comparing Price to Book Value Ratios: Integrated Oil companies Illustration Valuing a firm using the cross-sectional regression Illustration Estimating the PS ratio for a high growth firm in the two-stage model Illustration Estimating the price to sales ratio for Whole Foods Illustration Estimating the effect of lower margins of price-sales ratios Illustration Choosing between a high-margin and a low-margin strategy.
Examining the effects of moving to a lower-margin, higher volume strategy: Whole Foods Illustration Valuing a brand name using value-sales ratio Illustration Valuing a brand name: The Coca Cola Example Illustration Revenue Multiples and Margins: Specialty Retailers Illustration Internet Retailers Illustration Price to Sales ratio in a sector across time Illustration Valuing firms using Market Regression Illustration Estimating the Value per Subscriber: Internet Portal Illustration Comparing Value per Member: Social Media companies.
Comparing PE ratios: Insurance Companies Illustration Earnings Multiples for Business: JPM Chase Illustration Price to Book Value Ratios: European Banks. Normalizing Earnings for a Firm after a Poor Year: Daimler Benz in Illustration Dana Corp in Illustration Normalizing Earnings for a Cyclical Firm in a Recession: Historical Margin Illustration Valuing a Cyclical Company: Toyota Illustration Valuing a Commodity Company: Exxon Mobil Illustration Adjust debt ratio over time: Hyundai Illustration There is a dataset on the web that summarizes book and market value debt ratios by industry group in the United States for the most recent year.
This spreadsheet allows you to normalize the earnings for a firm, using a variety of approaches distress. Estimates the probability that a firm will cease existence as a going concern - i. Estimating Revenue Growth: Tesla Illustration Estimating Reinvestment Needs: Estimating Risk Parameters and Costs of Capital: Estimating Firm Value: Valuing Equity per Share: Value Drivers for Tesla.
Values a high growth firm, based on revenue growth and target margins. Estimating a Fundamental Beta: InfoSoft Illustration Adjusting bottom-up beta for non-diversification Illustration Estimating Cost of Debt: Chez Pierre and Infosoft Illustration Estimating Cost of Capital: Estimating Operating Income: Estimating Growth: Closure in Valuation and Terminal Values: Valuing Chez Pierre for sale Illustration Valuing Infosoft Illustration Valuing a Private Equity Stake.
This spreadsheet allows you to estimate the illiquidity discount on a private firm.
The Value of Control at Digital Illustration Valuing Synergy: Compaq and Digital Illustration Tax Benefits of writing up Asset Values after Takeover: Congoleum Inc.
Setting the Exchange Ratio Illustration Valuing A Leveraged downloadout: This spreadsheet allows you to estimate the approximate value of synergy in a merger or acquisition. This spreadsheet allows you to evaluate the cash flows and the value of a leveraged downloadout. Valuing an office building Illustration Valuing the Equity Stake in a building Illustration Valuing a property based upon comparables Illustration Regression Approach. Values a income-generating real estate properties.
June Illustration Valuing a dental practice Illustration Valuing the Option to Delay a Project Illustration Valuing a Patent: Avonex in Illustration Valuing Biogen as a firm Illustration Valuing an Oil Reserve Illustration Valuing an oil company - Gulf Oil in Standard deviations in firm value and equity value by industry group in the United States. Estimate the value of an option to delay an investment. Estimate the value of a patent.
Estimate the value of an undeveloped natural resource reserve. Valuing an Option to Expand: Ambev and Guarana Illustration Considering the value of the option to expand Illustration Valuing an Option to Abandon: Airbus and Lear Aircraft. This spreadsheet allows you to estimate the value of the option to expand a project to cover new markets or new products, using the Black-Scholes model.
Estimate the value of the option to abandon an investment. Estimate the value of financial flexibility as an option. Valuing Equity as an Option Illustration Firm Value and Equity Value Illustration Equity Value and Volatility Illustration Probabilities of default and Default Spreads Illustration Estimate the value the equity in a troubled firm as an option.
Potential for value creation from divestiture: Boeing Illustration Operating Margin Comparisons Illustration Tax Burden and Valuation Illustration Value Enhancement at SAP: Value Enhancement at Blockbuster: Status Quo Value versus Restructured Value.
There is a dataset on the web that summarizes operating margins, tax rates and non-cash working capital as a percent of revenues by industry group for the United States. There is a dataset on the web that summarizes returns on capital and reinvestment rates by industry group for the United States.
There is a dataset on the web that summarizes debt ratios and costs of capital by industry group for the United States. This spreadsheet allows you to estimate the approximate effect of changing the way a firm is run on its value.
This spreadsheet allows you to convert a discounted cash flow valuation into an EVA valuation and vice versa. Valuing a company facing threat of nationalization Illustration Valuing a company facing shifting regulatory risk Illustration Decision Tree Analysis: Valuing a Young Pharmaceutical Company Illustration Valuing an oil company: Estimates the value of a straight bond convbond.
Estimates the value of a convertible bond. Chooses the right model to value your firm. The supporting material includes: Chapter Outlines and overheads: These are saved as pdf files, and you need Adobe Acrobat to read them. You can download Adobe Acrobat by going to the Adobe site. To go to overheads, click here. Derivations and Discussion: These represent interesting questions that often come up in the context of the specified topic, with discussions and analyses.
These are readings from business and academic publications that supplement the specific topic. The solutions to each chapter are at the end of each chapter in the web site below. Powerpoint Presentations: These are power point presentations that are designed for use by instructors. You will need the password to download these as well.
These are spreadsheets that supplement the topic. They are in Microsoft Excel, and can be used on either a Mac or Windows system. These are useful datasets to supplement each chapter.
They generally include industry averages for key variables and represent updates on many of the tables in the book. Web Casts: These are webcasts of the lectures from the valuation class that I teach at Stern.
You can use the lecture notes and the text book to follow the lectures. Introduction to Valuation. How do you keep bias out of your valuation? What is the cost of having more detail in valuations?
Download as pdf file. Illustration 2. Effects of mismatching cashflows and discount rates Illustration 2. The potential for misuse with comparable firms. Is there an easy way to tell if a cashflow is an equity cashflow or a firm cashflow? What is the difference, if any, between discounted cashflow and asset based valuation? An open letter to Warren Buffett from a non-admirer. Operating margins, turnover ratios and returns on capital of firms in the United States, classified by industry.
Return on capital, debt equity ratios, book interest rates and returns on equity of firms in the United States, classified by industry. Working capital ratios for firms in the United States, classified by industry. Interest coverage and fixed charge coverage ratios for firms in the United States, classified by industry.
Book value debt ratios and market value debt ratios for firms in the United States, classified by industry. Compute the profitability ratios for a firm, based upon financial statement data. How different are accounting rules in different countries? How do you value a company when you do not trust the accounting statements?
Why is the marginal investor assumed to be diversified? How do I estimate historical standard deviations and variances? How about correlations and covariances?
What makes your stock price go up or down? There is a dataset on the web that summarizes standard deviations and variances of stocks in various sectors in the United States.
This spreadsheet allows you to estimate the value of a short term option, when the expected dividends during the option life can be estimated. This spreadsheet allows you to estimate the value of an option, when the underlying asset has a constant dividend yield. This spreadsheet allows you to estimate the parameters for a binomial model from the inputs to a Black-Scholes model.
This spreadsheet allows you to estimate the value of an option, when there is a potential dilution from exercise. How do I make sure that the inputs to the Black-Scholes model are consistent? Will the Black-Scholes and Binomial models give me different values and why?
How do my views on market efficiency affect how I approach valuation?
Survival bias in mutual fund performance Bogle on picking mutual funds Crazy market is tough to beat Summarizes historical returns on stocks, T. Bonds and T. Bills going back to This dataset includes default spreads for bonds in different ratings classes.
Contains the updated ratings for countries and the risk premiums associated with each. Shows the inputs used to calculate the premium in each year for the U. This spreadsheet allows you to estimate the implied equity premium in a market. Should I use the government bond rate of the country where my firm is located as my riskfree rate? What if I have a firm with operations in different countires and cashflows in different currencies? When would I use the arithmetic average risk premium as opposed to the geometric risk premium?
Why is the historical premium so much higher than the implied premium in the United States? Greenspan testimony Historical Risk premiums: A reexamination. Updated betas and unlevered betas by business sector in the United States. Costs of debt, costs of equity, debt ratios and costs of capital, by industry group, for firms in the United States. Estimate the accounting beta on a division or firm. Run a regression of stock returns against market returns and estimate risk parameters.
Estimate the unlevered beta for a firm and compute the betas as a function of the leverage of the firm. This spreadsheet allows you to estimate the synthetic rating and cost of debt for any firm.
This spreadsheet allows you to convert operating lease expenses into debt. This spreadsheet allows you to convert book values of debt into market values. When can I use the regression beta as my estimate of beta in a valuation? When estimating bottom-up betas by looking at comparable firms, how should I define comparable firms? Should I adjust the beta for a firm's size or other characteristics? Can I use the yield to maturity on a bond issued by the company as the cost of debt?
If I have an actual rating, do I need to even estimate a synthetic rating? How can I build a more complete model for estimating ratings? Can I use book value of debt as a proxy for market value of debt?
What should be in my market value of equity? A contrary view on betas Margin of Safety.. An alternative to beta? How do you know if a one-time charge or income is truly one time?