Beruflich Dokumente
Kultur Dokumente
OVERVIEW
Objectives:
INTRODUCTION TO
To learn a logical framework to analyze and value a
BUSINESS ANALYSIS & business by understanding relations with business
environment, industry structure, business strategy
VALUATION and the economic value of the firm.
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BASIS FOR ALL VALUATION
RELATIVE VALUATION APPROACHES
Relative valuation, estimates the value of an asset by The use of valuation models in investment
looking at the pricing of 'comparable' assets relative to decisions (i.e., in decisions on which assets are
a common variable like earnings, cash flows, book value under valued and which are over valued) are
or sales.
based upon
a perception that markets are inefficient and
CONTINGENT CLAIM VALUATION make mistakes in assessing value
an assumption about how and when these
Contingent claim valuation, uses option pricing models inefficiencies will get corrected
to measure the value of assets that share option
characteristics.
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Philosophical Basis:
Every asset has an intrinsic value that can be
estimated, based upon its characteristics in terms
of cash flows, growth and risk.
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DISCOUNTED CASH FLOW VALUATION ADVANTAGES OF DCF VALUATION!
Market Inefficiency: Markets are assumed to DCF valuation forces you to think about the
make mistakes in pricing assets across time, and underlying characteristics of the firm, and
are assumed to correct themselves over time, as understand its business. If nothing else, it brings
new information comes out about assets. 3
you face to face with the assumptions you are
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WHEN RELATIVE VALUATION WORKS BEST CONTINGENT CLAIM (OPTION) VALUATION!