I think this man is a great teacher. He explains everything in very clear language, and avoids obscurantism, yet without slowing the moving train down so much that it's at a crawl. He does well at presenting all the principles clearly, when it is easy to make someone's head swim, especially when a bit of maths are introduced. Good work!
In all my years of accounting I have never heard it explained better. You made it so easy to understand. You are an excellent teacher. Thank you for posting
If you wanna be successful, you must take responsibility for your emotions, not place the blame on others. In addition to making you feel more guilty about your faults, pointing the finger at others will only serve to increase your sense of personal accountability. There's always a risk in every investment, yet people still invest and succeed. You must look outward if you wanna be successful in life
it's easier for me to work with a broker. It's more of a partnership, all based on a shared percentage. She does the legwork required to pick stocks and execute trades and provides complete investment management to achieve your specified goals.
This is quite needful but for beginners, you shouldn't settle for videos alone or you see yourself losing all your money just like me when I started trading with these videos on here. We should be prepared to contribute
There are already financial analysts and trading experts(Phds) who have shelled out theories and ideas for years, but that doesn't mean you can't contribute. I highly recommend Expert Mrs. Pamela Kay Weaver. She is the best indeed
It has been mention several time in the video, "it's basic" of course other assumptions and calculation are not mention.This guys proves that any "complicated topic" should be explainable to a kid!!!! wonderful job Tom
Thanks for the detailed explanation. You're the first person on youtube that I've seen so far that goes into detail to give people a better understanding of the formula instead of just showing us how to plug in the numbers.
Have watched a few of your videos and found, in each one of them (including this one), a very lucid explanation which even a layman can understand. Thank you!
I would like to introduce you to the free online business valuation software of Ratiba . I hope it is useful for your business. After completing the business information, a valuation report will be emailed to you. Online valuation tools in this software are : 1. DCF Method : retiba.com/online-valuation/discounted-cash-flows/ 2. Risk Factors Summation : retiba.com/online-valuation/risk-factors-summation/ 3. Multiples Method : retiba.com/online-valuation/multiples-method/ 4. Score Cards Method : retiba.com/online-valuation/score-cards-method/
To me this is just an introduction video on DCF mechanics, which does a good job. Discount rate (e.g. 10%) will be different per each company and will change over time. The riskier the company the higher the discount rate. And yes, DCF is built upon PV calculation. If you understand PV formula you will also understand DCF.
Appreciate. Very nicely presented. Easy for students to comprehend. I am also a faculty and a professional in India dealing with Business Valuation and Corporate restructuring. Enjoyed the presentation style and the Content too. Keep it up. All the best.
Adam Fearon I hear ya man. I was a business major and I wish profs explained things so straight forward. I guess if they did “too many” people would actually learn and graduate from college LOL!
Why didn't I see you a year ago!? I failed that class, elective in my last year... Now working in m&a, I finally found you and understand... Thanks you, I'm just feeling stupid how I didn't understand it and failed the test...
this video is for high school kids .. a lot of the video i watched they are scared to discuss how to arrive at the discount rate and what to do if a company has a negative EBTA
Great vid, you have a very good technique to take the otherwise sonewhat complicated content and condense it into simple terms.. I got alot out of it . Thanks mate
Nice work Tim - would be very helpful if you could take the three valuation techniques you covered and apply them to "real-world" examples. Most of us are interested in the stock market, so how can we better use these techniques to perform valuations on the companies we are looking to invest in vs. an outright purchase? Again, really appreciate your teaching style. Thank you!
Todd, It has very little to do with it. Just look at today's PEs. Before you go at it Fundamentally, I suggest you learn a good technical analyses. Price action is king.
@@karimyakub7102 Have been trading for a while on my own but i always find myself loosing , till i came across Mr Kluas Muller . He Assisted me in doing all my trades , and came back successful . He also taught me how to handle all my trades , now im able to trade by myself . I advice you to trade with him
Excellent presentation. *Thank you.* Your presentation skills (e.g., cadence, calm, clarity, knowledge, ability to simplify, ability to foresee questions) = 💯 across the board. *Subscribing*
Finance 101. Finished my M.B.A., back in 2012. We studied several business case studies, from the Harvard Business School. Maybe considering inflation would have helped too. Inflation runs around 1.8 percent.
You do a good job helping people👍...Be a part of Encouraging Life Success Day...October 3rd, Encouraging Life Success Day is a day where we all wear green, which represents GOING for our goals and dreams while encouraging others to GO after their goals and dreams as well. October 3rd, Encouraging Life Success Day, wear GREEN 😊
For the cash flows in the more advanced sessions, I assume you will use future FCF and remove Capex portion. I think.Buffet used owner's earnings FCF, but that calc gives me a headache. So you want to set that discount rate to what you want to beat what you can get in a safer investment. Then when you find the particular stock and the intrinsic value, you want a big margin of safety! That is putting the intrinsic value against the market value. That % shld be bigger for small fish (50%) and around 25% for Industry leaders. Basically, you want to purchase at a deep discount...just like everything else you buy...but you want quality. Takes work bc many stocks will be priced at or near intrinsic value. When priced way over, time to wake up and come alive. It is quite exciting to find an edge. But first, I must study more. Best to really learn all.you can up front prior to action. It is a shame I didnt study this yrs ago, but that is ok. It is the process and journey that is satifying. The better returns is icing on the cake.
Is there a video expanding upon this concept? Also, is the NPV in a DCF analysis like saying that instead of the company being worth 500 million, its actually worth 378 million? Moreover, are the cash values for every year Free Cash Flows??
Repeating Tim to emphasize - Concerns when using DCF Method to Valuate Companies: Do companies stop in 5 years? Will they stop in 10 years? How accurate are the future cash flows being used? Is your assumed interest rate correct? There's many assumptions being made to utilize this model.
Can you do a more thorough video about the DCF valuation method? getting into the how you determine the terminal value, the interest rate / WACC. thanks !
This was really helpful! I've studied this awhile and this is the first time is really made sense. Is there a part 2 that you made somewhere along the line? Hope there was demand for it, I'd like to learn more from you on the topic of DCF.
Please could you do a weighted average cost of capital video? Specifically with a touch on finding component costs... Would make a good answer for the "how do you get the 10%" question.
Just so I understand correctly, this valuation would no be entirely precise, since you would be actually be earning 10% on the 1st years earnings for 4 years, and 10% on the 2nd years earnings for 3 years, etc. Is that correct? (actually, wouldn't that calculation be the Internal Rate of Return?)
Is the "CF" used in the above example derived from figures reflecting in the CF Statement or is "CF" actually Nett Profit, still to be posted to the Capital Acc.
What is the interest rate you're referring to? And why is it relevant here? Is it related to corporate bonds? I get that it's related to the risk, but how do you pick that number?
Great videos. The explanation of DCF was the best I’ve seen including the way I learned it in college. Did you or will you do a video on CAPM? Thanks for the education. It’s very helpful.
Something that's always thrown a wrench into my thinking on this matter (i.e., of discounting), is, $100 million today will have more buying-power than $100 million in five years' time; ergo, the former amount is "worth more."
@@whatwelearned, inflation has nothing to do with net-present-value or discounted-cash-flow models in finance -- even Tim Bennett, for a moment (2:52), misspeaks on this point in this video.
@@Commando303XI know what you mean “compounding” and “delayed gratification” is the key here. But also not going into the nitty gritty details because like Warren Buffett said “the secret to life is weak competition” and believe me, I am not trying to have more competition
I would like to introduce you to the free online business valuation software of Ratiba . I hope it is useful for your business. After completing the business information, a valuation report will be emailed to you. Online valuation tools in this software are : 1. DCF Method : retiba.com/online-valuation/discounted-cash-flows/ 2. Risk Factors Summation : retiba.com/online-valuation/risk-factors-summation/ 3. Multiples Method : retiba.com/online-valuation/multiples-method/ 4. Score Cards Method : retiba.com/online-valuation/score-cards-method/
That was very clear and but what if the cashflows still occurs after 5years untill infinity but we have only 5 years cashflows and the cash flow contines 100million there after ?
How do you apply say a required return of 10% to this example? Is the £378m the value of the company based on the future cash flows and a required return of 10%
I think this man is a great teacher. He explains everything in very clear language, and avoids obscurantism, yet without slowing the moving train down so much that it's at a crawl. He does well at presenting all the principles clearly, when it is easy to make someone's head swim, especially when a bit of maths are introduced. Good work!
In all my years of accounting I have never heard it explained better. You made it so easy to understand. You are an excellent teacher. Thank you for posting
Thankyou Tim. Your voice modulation is perfect for the listener to grasp the concepts you explain.
If you wanna be successful, you must take responsibility for your emotions, not place the blame on others. In addition to making you feel more guilty about your faults, pointing the finger at others will only serve to increase your sense of personal accountability. There's always a risk in every investment, yet people still invest and succeed. You must look outward if you wanna be successful in life
Sometimes I wonder if he uses magical powers to trade I've never heard or seen any of his clients complain of loss... I think he's just too perfect.👌🏿
it's easier for me to work with a broker. It's more of a partnership, all based on a shared percentage. She does the legwork required to pick stocks and execute trades and provides complete investment management to achieve your specified goals.
No doubt ma'am Pamela Trading Services is very good, I invested €5,000 and cashed out €124,700 after 1 month. I still wonder how she gets her analysis
This is quite needful but for beginners, you shouldn't settle for videos alone or you see yourself losing all your money just like me when I started trading with these videos on here. We should be prepared to contribute
There are already financial analysts and trading experts(Phds) who have shelled out theories and ideas for years, but that doesn't mean you can't contribute. I highly recommend Expert Mrs. Pamela Kay Weaver. She is the best indeed
It has been mention several time in the video, "it's basic" of course other assumptions and calculation are not mention.This guys proves that any "complicated topic" should be explainable to a kid!!!! wonderful job Tom
I always come back to this video.. It's been over 2 years now.. The best dcf explanation!
The explanation makes the concepts are pretty easy to understand. Very helpful.
Thanks for the detailed explanation. You're the first person on youtube that I've seen so far that goes into detail to give people a better understanding of the formula instead of just showing us how to plug in the numbers.
This guy is freaking amazing. Superb explanation!!!
Yep - the result of applying DCF is to generate a net present value. Tim.
I could listen to this guy talk about bricks and mortar all day long. The way he talks and explains things is so entrancing.
Fantastic teaching method employed by this brilliant teacher-Bravo
Great intro video. Just finished my MBA and needed a quick refresher as I evaluate a business
i despaired of ever understanding DCF analysis but this gave me a toehold!
Can you do a real-life example with a publicly traded company?
Have watched a few of your videos and found, in each one of them (including this one), a very lucid explanation which even a layman can understand. Thank you!
Such a pleasant surprise to get a trustworthy British accent on a financial explanation video 😂
Thanks for this simplification of the DCF Model. Yes there is demand for more.
I would like to introduce you to the free online business valuation software of Ratiba . I hope it is useful for your business.
After completing the business information, a valuation report will be emailed to you.
Online valuation tools in this software are :
1. DCF Method
: retiba.com/online-valuation/discounted-cash-flows/
2. Risk Factors Summation : retiba.com/online-valuation/risk-factors-summation/
3. Multiples Method
: retiba.com/online-valuation/multiples-method/
4. Score Cards Method
: retiba.com/online-valuation/score-cards-method/
To me this is just an introduction video on DCF mechanics, which does a good job. Discount rate (e.g. 10%) will be different per each company and will change over time. The riskier the company the higher the discount rate. And yes, DCF is built upon PV calculation. If you understand PV formula you will also understand DCF.
let me cry first for failing my last exam 😭😭😭 finally I understand these the DCF. thanks for the great video
Thank you Tim. I'll apreciate if you could continue with these valuation models. You're a really nice teacher.
This is brilliant Tim and a good video to watch. I really want to start something new like investing in the market. For starters I have no idea
Here is someone I would like you to meet afx_solution team on telegram. Definitely the right investing service
Yeah I recognize the handle on telegram, these guys are incredible at what they do.
I’ve earned £14k trading on his portfolio account.This is truly a remarkable experience for me Maria
Discounting Rate . com
read books like fundmental analysis for dummies or intelligent investor or security analysis. These books will be enough for you
Appreciate. Very nicely presented. Easy for students to comprehend. I am also a faculty and a professional in India dealing with Business Valuation and Corporate restructuring. Enjoyed the presentation style and the Content too. Keep it up. All the best.
Sir, you are such a good teacher. Thanks!
These videos are more helpful than my corporate finance lectures at uni
Your lectures have played a predominant role in clearing my professional exam. it has enhanced my understanding about the subject :) thanks a lot:)
Great video. Thank you.
(Finance major that was taught DCF in college, but never actually learned it. Until now)
Adam Fearon haha same here!
Adam Fearon I hear ya man. I was a business major and I wish profs explained things so straight forward. I guess if they did “too many” people would actually learn and graduate from college LOL!
Are
Adam Fearon was my
You're a great teacher. Enjoyed this lecture! 👍
Best dcf teaching
THANKS YOU SO MUCH! THIS HELPED ME A LOT! ❤️❤️❤️ IM A FIRST YEAR FINANCE STUDENT WISH ME LUCK!!!
Why didn't I see you a year ago!? I failed that class, elective in my last year... Now working in m&a, I finally found you and understand... Thanks you, I'm just feeling stupid how I didn't understand it and failed the test...
I find your videos reek of competence sir. Well done.
Interest rate of 10% sounds so extreme in 2020
this video is for high school kids .. a lot of the video i watched they are scared to discuss how to arrive at the discount rate and what to do if a company has a negative EBTA
%10 sounds so low when you live in Turkey
@@mehmetsahinozalumni5620 spot on!
@@kingofheartsxyz
,n
Well nasdaq went up approx 40% in 2020 and s&p 500 about 16%.
Thank you a lot for this video. This is very interesting and informative. Keep posting like those amazing videos, this is awesome.
the best explanation i saw) thanks from Uzbekistan
Great vid, you have a very good technique to take the otherwise sonewhat complicated content and condense it into simple terms.. I got alot out of it . Thanks mate
This dude's voice is so calm, I'm going to put his videos on to get to sleep haha.
Just Brilliant. Thanks from India.
Terminal value and the impact of interest rate well explianed. Thank you!
Brilliant Video to educate the masses. Appreciate.
Nice work Tim - would be very helpful if you could take the three valuation techniques you covered and apply them to "real-world" examples. Most of us are interested in the stock market, so how can we better use these techniques to perform valuations on the companies we are looking to invest in vs. an outright purchase?
Again, really appreciate your teaching style. Thank you!
Todd, It has very little to do with it. Just look at today's PEs. Before you go at it Fundamentally, I suggest you learn a good technical analyses. Price action is king.
Todd, I think that is a good idea as well.
It's been 7 years... How you doing mate?
@@Fernandolunatoro1 fjri egg iml4 d tlevebrl5hr oe2xjllrvebornkp3 lec kg kr keo3 lwdyyevleil4bojrbowl7j4 bh 9ntbevivrwibknevujikvlritvi
I now know as much about how to value a company using DCF as I knew 10min 49sec ago..
great tutorial...wish I had this back in grad school
I find Tim an excellent Tutor .love him and his white board.usually go back over it a couple times to totally get it.
This was such a great explanation, great video!
Very well done video. Clear and concise - great teacher
this is a very good video to clear concepts. thk you
Awesome video. Wish this guy had more.
Very informative video. Investing with forex now should be at the top of every wise individual’s list.
Yeah you are right Forex trading is very simple and more profitable when you invest under guidance of an expert
@@karimyakub7102 yeah very true I Made around $3000 in forex trading investment with help of my reliable account manager
@@jonmorrone4297 wow congratulation thats lovely to hear
@@jonmorrone4297 tell me more about your investment manager and how long have you trade with him?
@@karimyakub7102 Have been trading for a while on my own but i always find myself loosing , till i came across Mr Kluas Muller .
He Assisted me in doing all my trades , and came back successful .
He also taught me how to handle all my trades , now im able to trade by myself .
I advice you to trade with him
Excellent presentation. *Thank you.*
Your presentation skills (e.g., cadence, calm, clarity, knowledge, ability to simplify, ability to foresee questions) = 💯 across the board. *Subscribing*
Thank you, was useful refresher and info.
Finance 101. Finished my M.B.A., back in 2012. We studied several business case studies, from the Harvard Business School. Maybe considering inflation would have helped too. Inflation runs around 1.8 percent.
You do a good job helping people👍...Be a part of Encouraging Life Success Day...October 3rd, Encouraging Life Success Day is a day where we all wear green, which represents GOING for our goals and dreams while encouraging others to GO after their goals and dreams as well. October 3rd, Encouraging Life Success Day, wear GREEN 😊
The DCF will help you calculate the market value of company assets. Goodwill is an asset so there is that connection.
Thanks, would love to watch a follow up!
Well explained! Thank you Tim!
Great lesson Tim bravo
This is a greatly explained video.
For the cash flows in the more advanced sessions, I assume you will use future FCF and remove Capex portion. I think.Buffet used owner's earnings FCF, but that calc gives me a headache. So you want to set that discount rate to what you want to beat what you can get in a safer investment. Then when you find the particular stock and the intrinsic value, you want a big margin of safety! That is putting the intrinsic value against the market value. That % shld be bigger for small fish (50%) and around 25% for Industry leaders. Basically, you want to purchase at a deep discount...just like everything else you buy...but you want quality. Takes work bc many stocks will be priced at or near intrinsic value. When priced way over, time to wake up and come alive. It is quite exciting to find an edge. But first, I must study more. Best to really learn all.you can up front prior to action. It is a shame I didnt study this yrs ago, but that is ok. It is the process and journey that is satifying. The better returns is icing on the cake.
Is there a video expanding upon this concept? Also, is the NPV in a DCF analysis like saying that instead of the company being worth 500 million, its actually worth 378 million? Moreover, are the cash values for every year Free Cash Flows??
Repeating Tim to emphasize -
Concerns when using DCF Method to Valuate Companies:
Do companies stop in 5 years? Will they stop in 10 years?
How accurate are the future cash flows being used?
Is your assumed interest rate correct?
There's many assumptions being made to utilize this model.
So well explained! Finally understand this concept at its roots
Thank you for the great lesson! Keep it up.
Excellently summed up! 👏🏻
Thank you for this helpful video! Can someone please explain how to get your growth rate to then get your terminal value.
Can you do a more thorough video about the DCF valuation method? getting into the how you determine the terminal value, the interest rate / WACC. thanks !
This was really helpful! I've studied this awhile and this is the first time is really made sense. Is there a part 2 that you made somewhere along the line? Hope there was demand for it, I'd like to learn more from you on the topic of DCF.
Really very well explained. Thanks
Great introductory for me, into learning about DCF. Thanks!
Please could you do a weighted average cost of capital video? Specifically with a touch on finding component costs... Would make a good answer for the "how do you get the 10%" question.
Marvelous video...Tim. Im looking forward to see the more details part of DCF.
Great videos! I was scratching head revising for corporate finance exam and still couldnt get my head around the evaluation approach. You are a star!
Fantastic explanation
Question please at 0:43 --
This is called what?
Pardon me. Thank you.
1:50 start
Just so I understand correctly, this valuation would no be entirely precise, since you would be actually be earning 10% on the 1st years earnings for 4 years, and 10% on the 2nd years earnings for 3 years, etc. Is that correct? (actually, wouldn't that calculation be the Internal Rate of Return?)
great video but where should i get the interest rate from ?
Great video! I would like a more collocates video. And you could go over CAPM model as well within the more complicated DCF valuing of a company.
Is the "CF" used in the above example derived from figures reflecting in the CF Statement or is "CF" actually Nett Profit, still to be posted to the Capital Acc.
Which calculation for the value of intrinsic value is most accurate: 1) DCF(earnings based), 2) DCF (FCF based), 3) projected FCF. Thank you.
Do em all and take the mean value 🤔🤔
helpfull work out. this guy is just brilliant
Very nice video. Wished I found this earlier
Incredible teaching! Thank you!
Hi Tim, how do we get in to decision if we could buy or not this company? and if is yes, for how much?
since interest rates are negative now is the money actually getting more worth in the future?
Indeed - great video very well explained.
Nice video. How can we find company CF for next 5 years ?
What is the interest rate you're referring to? And why is it relevant here? Is it related to corporate bonds? I get that it's related to the risk, but how do you pick that number?
Excellent video.
I immediately noticed that 90m at a rate of 10% does not add up to the original 100m. Should have rounded the 90.9 to 91.
Anyway good video!
Great videos. The explanation of DCF was the best I’ve seen including the way I learned it in college. Did you or will you do a video on CAPM? Thanks for the education. It’s very helpful.
Something that's always thrown a wrench into my thinking on this matter (i.e., of discounting), is, $100 million today will have more buying-power than $100 million in five years' time; ergo, the former amount is "worth more."
Well you just have to consider that inflation exists and then it's true 99& of the time
@@whatwelearned, inflation has nothing to do with net-present-value or discounted-cash-flow models in finance -- even Tim Bennett, for a moment (2:52), misspeaks on this point in this video.
@@Commando303XI know what you mean “compounding” and “delayed gratification” is the key here. But also not going into the nitty gritty details because like Warren Buffett said “the secret to life is weak competition” and believe me, I am not trying to have more competition
Excellent! You've helped me already with this superficial overview! Greetings from Germany!
I absolutelly love it! Thanks
Glad I kept my Finance 530 book. I use it as a reference, from time to time.
I would like to introduce you to the free online business valuation software of Ratiba . I hope it is useful for your business.
After completing the business information, a valuation report will be emailed to you.
Online valuation tools in this software are :
1. DCF Method
: retiba.com/online-valuation/discounted-cash-flows/
2. Risk Factors Summation : retiba.com/online-valuation/risk-factors-summation/
3. Multiples Method
: retiba.com/online-valuation/multiples-method/
4. Score Cards Method
: retiba.com/online-valuation/score-cards-method/
That was very clear and but what if the cashflows still occurs after 5years untill infinity but we have only 5 years cashflows and the cash flow contines 100million there after ?
Can I know how do you derive the cash flow amount? Do you consider bank loaned to the company or operating cash flow?
so do you?
How do you apply say a required return of 10% to this example? Is the £378m the value of the company based on the future cash flows and a required return of 10%
Great video!
Great video, makes it easy to understand!
Thank you so much! After some time stressing I finally find a video that explains it in a way I can understand 🤗