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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. 

 

Learning Objectives

  • Define critical valuation terms.
  • Discover how a company can be valued relative to its competitors using several common metrics.
  • Discover how to evaluate company Betas, and to subsequently un-lever or re-lever them.
  • Discover how to compare a derived Enterprise Value from a model to the market. 

 

 

Last updated/reviewed: January 28, 2018

5 Reviews (23 ratings)Reviews

Member's Profile
Should either have intermediate knowledge to take this course or plan on spending lots of extra time. I had to listen and re-listen to much of the course. Some numbers behind more of the explanations would have been beneficial. I am sure instructor is very bright, but I had trouble following his comments and explanations at times. Seeing a formula without numbers harder to comprehend and remember....
5
Member's Profile
Interesting and concise. Good slide deck, but unfortunately the slide deck did not seem to appear during the lecture. Had to download it and flip through manually.
5
Anonymous Author
The program materials are well thought out and almost provide a checklist for valuation models.
4
Member's Profile
Good course, would be helpful to add a section on valuations of private companies
4
Anonymous Author
Good review.

Prerequisites

Course Complexity: Advanced

Prerequisite: Experience with business valuation

 

Advanced Preparation: None

 

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
Approaches, Inputs, and Issues
  11:31Relative Valuation Through Comps
  22:42Valuation via DCF Analysis
  12:40Free Cash Flows to Firm and Related DCF
  29:09Discount Rates and Valuation
Conclusion
  13:53Final Accounting Considerations in Valuation
SUPPORTING MATERIALS
  PDFSlides: Valuation: Approaches, Inputs, and Issues
  PDFValuation: Approaches, Inputs, and Issues Glossary Index
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM