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Valuation - Introduction

The value of a business is the total combined value of the debt and the value of the equity.  However, there are many approaches that can be taken to value a business or an individual stock.

In this module a range of techniques will be explored. Specifically, two types of methods will be discussed: methods that do not involve forecasting and methods that involve forecasting. Methods that do not involve forecasting include: comparables approach, multiple screening method and asset-based valuation. Methods that involve forecasting are dividend models and discounted cash flow analysis.

You will learn that each method has its own advantages and disadvantages but if the fundamental investor takes some account of other external factors (such as the current market conditions, the economic climate and the competition) then this can modify their view of the value.

The learning outcomes of this module are:

  • To explore a range of valuation techniques available to value a company
  • To understand the advantages and disadvantages of each valuation technique
  • To understand how other factors can impact a company’s valuation

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