Transcription of Valuation Basics - ExcelModels
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Valuation Basics - ExcelModels
Valuation Basics Revised May 12, 2014. By Scott Beber, ExcelModels Table of Contents 1. INTRODUCTION .. 3. 2. METHODOLOGY 1: DISCOUNTED CASH FLOW .. 3. WEIGHTED AVERAGE COST OF CAPITAL .. 3. PRESENT VALUE OF FREE CASH FLOWS .. 3. 3. METHODOLOGIES 2 AND 3: INDUSTRY MULTIPLES .. 4. PRICE TO EARNINGS .. 4. EV TO EBITDA .. 5. 4. METHODOLOGY 4: INCREMENTAL VALUE-ADD .. 5. UNDERSTANDING SYNERGY .. 5. METHODOLOGY .. 5. 5. FORECASTING CASH FLOWS .. 6. STRAIGHT LINE .. 6. PERCENT OF SALES .. 6. COMPOUND ANNUAL GROWTH RATE (CAGR) .. 6. REGRESSION .. 6. Page 2. 1. INTRODUCTION. This document is intended to explain rudimentary company Valuation techniques. A rigorous Valuation will often rely on these, and other, measures, to arrive at a range. 2. METHODOLOGY 1: DISCOUNTED CASH FLOW. The Discounted Cash Flow method calculates a Net Present Value of the company as a whole. It is dependent on an accurate depiction of historical cash flow, the basis of which is used to make cash flow projections for future years, plus a residual value of cash flows in perpetuity thereafter.
Page 3 1. INTRODUCTION This document is intended to explain rudimentary company valuation techniques. A rigorous valuation will often rely …
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