330795377.

xls

Using the models in this diskette

The spreadsheet programs on this diskette are designed to supplement the
book on valuation. While short descriptions of the models are provided,
detailed questions can be best answered by referencing the appropriate
section in the book.
What do you need to run these programs?
1. Either Lotus 3.* or Excel 4.* (IBM) or Excel 4 (Mac).
2. The data for the firm that you want to value.

A short description
There are three groups of programs on this diskette -I. Discounted Cashflow Valuation:
(1) Dividend Discount Models (Steady State, 2 stage, 3 stage, H model)
(2) Free Cashflow to Equity Models (Steady State, 2 stage, 3 stage)
(3) Free Cashflow to Firm Models (2 stage, General)
II. Relative Valuation:
(1) PE Multiples
(2) PBV Multiples
(3) PS Multiples
III. Option Pricing Models
(1) Valuing Equity
(2) Valuing Product Patents/ Start-up firms
(3) Valuing Natural Resource firms

A suggested sequence for the first-time user

If you know the model you need, go directly to the program you need.

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If you do not know the model you need for your valuation, do the following:
1. Run the program titled 'Model.wks (Model.xls), or see chart below.
2. Enter the characteristics of the firm you want to value.
3. Go the model suggested by the model choice program.
4. Choose either the simpler or more complex version of the model.

Notes on using the spreadsheet models

1. Enter the inputs in the units requested.
2. Check the warning page, to see if any red flags are raised.
3. Check the output page, to see the output.
Choosing the right model
Earnings

Dividends

Sign

Normalcy Growth

Source of vs. FCFE

Leverage

+'ve

Normal

Stable

NA

Stable

+'ve

Normal

Stable

NA

FCFE

Stable

+'ve

Normal

Stable

NA

NA

Unstable

+'ve

Normal

Moderate

General

=FCFE

Stable

+'ve

Normal

Moderate

Specific

=FCFE

Stable

+'ve

Normal

Moderate

Specific

FCFE

Stable

+'ve

Normal

Moderate

Either

+'ve

Normal

High

Either

+'ve

Normal

High

Either

FCFE

Stable

+'ve

Normal

High

Either

NA

Unstable

+'ve

Abnormal

NA

NA

NA

Stable

+'ve

Abnomal

NA

NA

NA

Unstable

-'ve

Cyclical

NA

NA

NA

Stable

-'ve

Cyclical

NA

NA

NA

Unstable

-'ve

Troubled

NA

NA

NA

Either

-'ve

Troubled

NA

NA

NA

Either

-'ve

Start-up

NA

NA

NA

Either

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=FCFE

NA
=FCFE

Unstable
Stable

330795377.xls

-ve

Start-up

NA

NA

NA: Not Applicable

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NA

Either

330795377.xls

If you have further questions on the models, review the appropriate chapter in the
Expanded

Simple

MODELCHO.*

Chapter
Model Choice

NEWGORDO.*

Gordon Growth Model (pp

NEWDDM2S.* XDDM2.*

Two-Stage DDM

NEWDDMHM.* XDDMH.*

The H Model

NEWDDM3S.*

Three-Stage DDM

NEWFCFES.*

FCFE Stable Growth Model

NEWFCFE2.*

XFCFE2.*

NEWFCFE3.*
NEWFCFF2.*

Two-Stage FCFE Model

Three-Stage FCFE Model

XFCFF2.*

DETAILVA.*

Two-Stage FCFF Model

General FCFF Model

NEWNORME.*

Normalized EPS Model

XEQUITYM.*Multiples for Equity
XMULTCF.*

NEWRESTR.*

"

for fi "

Corporate Restructuring

EQUITYOP.*

Equity as an Option

NEWPRODU.*

Natural Resource Option

NEWNATRE.*

Product Option

The simple versions of the programs require fewer inputs but allow fewer options.

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esigned to supplement the

e models are provided,

rencing the appropriate

age, 3 stage, H model)

, 2 stage, 3 stage)

he program you need.

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valuation, do the following:

or see chart below.

program.

rsion of the model.

s are raised.

Other

Valuation

Factors

Model

NA

Gordon Growth

NA

FCFE Stable

NA

FCFF Stable

NA

H Model

NA

2 stage DDM

NA

2 stage FCFE

NA

2 stage FCFF

NA

3 stage DDM

NA

3 stage FCFE

NA

3 stage FCFF

NA

Normalized EPS

NA

Normalized FCFF

NA

Normalized EPS

NA

Normalized FCFF

Turn aroundFCFF Model

Bankruptcy Option Model
Many lines FCFF Model

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Single line Option Model

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appropriate chapter in the book.

ow fewer options.

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