- SIMPLE BENCH-MARKING
Book asset value
Relative multiples of entity/equity value to various measures of earnings, cash flow, dividends, sales and book value
Screening of companies by multiple measures - INTRINSIC CORPORATE VALUE
Compute Present Value (PV) of forecast stream of:
Dividends – DDM
Free Cash Flow – DCF
(Residual) Earnings – RE or RIVM
HOW TO DEVELOP THE ARGUMENT
Define objectives of literature review
Plan a clear line of argument through the valuation models
Use references to specific academic research articles to support each argument throughout the review
Show a good understanding of the differences between:
Valuation models preferred in most academic research studies
Valuation methods applied in practice by most equity analysts
Try to link review of academic literature to the valuation conclusions from your company case study
Show understanding of all valuation models
Compare advantages and limitations of each
Understand difference between theory of corporate valuation and its practice in financial markets by applied equity analysts
Sample Solution
