Corporate and Asset Valuation: Approaches, Inputs and Issues

This course provides an overview of valuation and the principal methods used to value firms or any cash flow producing asset.  Relative valuation, commonly known as the “comps” (comparables) approach, is initially introduced, along with several metrics often used to compare competitors. 

The remainder of the course is focused on the discounted cash flow (DCF) approach to valuation, where three approaches are discussed: 1) the dividend discount model, 2) cash flows to equity, and 3) cash flows to the firm, as well as in what instances each is most applicable. 

In the process of introducing the DCF approach, we discuss some critical valuation frameworks and tools, including the Capital Asset Pricing Model (CAPM), the Weighted Average Cost of Capital, and the un-levering and re-levering of Beta. 

The course covers:

• Critical valuation terms including Enterprise Value, Free Cash Flows, EBITDA, Capital Asset Pricing Model, Beta, and the Weighted Average Cost of Capital.

• How a company can be valued relative to its competitors using several common metrics including Price-Earnings Ratio, Price to Sales, Price to Book Value, and Enterprise Value to EBITDA.

• Computing EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) and Free Cash Flows to the Firm

• Recognizing whether a valuation model should be based upon the cash flows to the entire firm, or the residual cash flows to equity holders.

• How to evaluate company Betas, and to subsequently un-lever or re-lever them.

• How to compare a derived Enterprise Value from a model to the market.