Chapter 3: Every asset has an intrinsic value!
ฝัง
- เผยแพร่เมื่อ 21 มี.ค. 2024
- Description: Support session to accompany chapter 3 of the updated version of the Little Book of Valuation, published in March 2024.
Publisher: John Wiley
Amazon link: www.amazon.com/Little-Book-Va...
My webpage for the book: pages.stern.nyu.edu/~adamodar...
In this session, I look at the steps in intrinsic valuation, starting with cash flows, moving on to costs discount rates (costs of equity and capital) and topping off with growth and forecasts for the future. I use Kraft Heinz in 2022 as my lab experiment to illustrate the process.
KHC valuation: pages.stern.nyu.edu/~adamodar...
thank you Professor
Thanks Prof. Aswath Damodar, your generosity makes us believe in humanity.
it is super helpful to watch these videos after reading each chapter. It helps clarify lots of things and thinking behind the approaches. I have to say I was stymied by the 6Y number at (32:00) and the clarification to 11 year on the video is a good example. Thanks for the book and video series. cheers! Nathan
There is another error in the discontinued computation at 33 min it should be divided in stead of multiplied in the formula from year 6 to get the discount factor.
in 25:21 for computing the cost of capital, the percentage of capital thats equity must be multiplied with the cost of equity for the first half of the formula.... I think u forgot to put a "/" symbol . cost of capital= 9.02%(44.8/(44.8+ 19.5))+.... just a minor change lol
Thanks for putting all these videos online. Been following them for year. A minor correction for the last applied formula (around time 24:24) "The cost of capital is a weighted average of the two, with the weights based upon the market value": in the formula it should be -> 9.02%*(44.8 / (44.8 + 19.5)), in the video the formula is multiplying instead of dividing the equity and total book value -> 9.02% * (44.8 * (44.8+19.5)). See "/" vs "*".Thanks for all your hard work and for publishing the courses.
Do you know how Damodaran come up with ERP 5.67% for KHC. I am trying to do valuation for HD. please help appreciate. thanks
@@36boys. It is equity return minus risk free rate. It can be S&P500 minus gov.bonds rate. Professor talks about "geografical region where the company operates", so it could be local equity index (instead of S&P500).
i did not understood the part in which he keeps reinvestment rate 10% for stable growth period
@Aswath Damodaran Time 10:49 of the video. How did you arrive at the Reinvestment figures? I could not follow that. Any help is much appreciated.
((EBIT paid after tax - FCFF) / EBIT paid after tax ) *100
in the book, the debt repaid for 2021 is 7126$ but in the video, it is 8161$, and in 2020 the book has 8813$ but in the video, it is 10655$, does the video have the wrong numbers or does the book?
Quick clarification: Shouldn’t reinvestment at 11:50 be capex plus change in nwc plus d&a = $4,003 for 2022 vs. $1,224? Or Am I missing something?
2899.93-1675.93=1224
I have calculated the value in the table at ca time 32:48 are they all wrong from year 5? Or am i doing something wrong?
I have the same thing! I ended up with results that are similar but not the same. My guess is there are some differences due to rounding or something?
Especially because the first 5 years my numbers are the same. Which is when the growth rate was a steady 2%.
So perhaps its the decling growth rate at linear intervals in combination with rounding up or down, that causes the discrepancies after year 5.
Does anybody understand how to arrive at change in non-cash WC of -1761? Because I get -1843.
The way I calculated it was:
Change in non-cash WC = Change in Current assets - Change in Current liabilities
Change in CA - Change in CL = (-228 - 1121 - 314) - (152 + 28) = -1663 - 180 = -1843.
Thanks!
In the book on page 48 he writes: "Finally, the change in non-cash working capital also includes the cash flow effects of deffered taxes".
For 2022 the deferred income tax was -278.
If you ignore the plus and minus signes of the numbers and calculate Changes in Current assets + Deffered income tax - Change in Current liabilities...
228 + 1121 + 314 + 278 - 152 - 28 = 1761
...you'll get the same result for the changes in non-cash WC as in the video / book.