Aswath Damodaran

Investment Valuation

• Gebundenes Buch

Produktbeschreibung

Updated edition of the definitive guide to investment valuation tools and techniques Investment Valuation: Tools and Techniques for Determining the Value of Any Asset delves into valuation techniques for a variety of different asset classes, including real options, start-up firms, unconventional assets, distressed companies and private equity, real estate, and many more, and explains how to choose the right model for any given asset valuation scenario. The models are presented with real-world examples so as to capture some of the problems inherent in applying these models, with discussion of differences and common elements between the models to provide readers with a holistic understanding of the subject matter. Written by a professor of finance who is widely regarded as one of the best educators and thinkers on the topic of investment valuation, this newly revised and updated Fourth Edition explores topics including: * Understanding financial statements, the basics of risk, and tests and evidence for market efficiency * Estimating risk parameters and costs of financing, terminal value, and equity value per share * Using scenario analysis, decision trees, and simulations for probabilistic approaches in valuation Investment Valuation: Tools and Techniques for Determining the Value of Any Asset is an essential resource for all investors and students of financial markets seeking an all-in-one guide to expand their valuation knowledge and make better investment decisions.

Produktdetails

• Verlag: Wiley
• 4th edition
• Erscheinungstermin: 24. Dezember 2024
• Englisch
• ISBN-13: 9781394254606
• ISBN-10: 1394254601
• Artikelnr.: 70702669

Inhaltsangabe

CHAPTER 1 Introduction to Valuation 1 A Philosophical Basis for Valuation 1
Generalities about Valuation 2 The Role of Valuation 6 Conclusion 9
Questions and Short Problems 9 CHAPTER 2 Approaches to Valuation 11
Discounted Cash Flow Valuation 11 Relative Valuation 19 Contingent Claim
Valuation 23 Conclusion 25 Questions and Short Problems 25 CHAPTER 3
Understanding Financial Statements 27 The Basic Accounting Statements 27
Asset Measurement and Valuation 29 Measuring Financing Mix 36 Measuring
Earnings and Profitability 42 Measuring Risk 47 Other Issues in Analyzing
Financial Statements 53 Conclusion 55 Questions and Short Problems 55
CHAPTER 4 The Basics of Risk 58 What is Risk? 58 Equity Risk and Expected
Return 59 Alternative Models for Equity Risk 71 A Comparative Analysis of
Equity Risk Models 76 Models of Default Risk 77 Conclusion 81 Questions and
Short Problems 82 CHAPTER 5 Option Pricing Theory and Models 87 Basics of
Option Pricing 87 Determinants of Option Value 89 Option Pricing Models 90
Extensions of Option Pricing 107 Conclusion 109 Questions and Short
Problems 109 CHAPTER 6 Market Efficiency--Definition, Tests, and Evidence
111 Market Efficiency and Investment Valuation 111 What Is an Efficient
Market? 112 Implications of Market Efficiency 112 Necessary Conditions for
Market Efficiency 114 Propositions about Market Efficiency 114 Testing
Market Efficiency 116 Cardinal Sins in Testing Market Efficiency 120 Some
Lesser Sins That Can Be a Problem 121 Evidence on Market Efficiency 122
Time Series Properties of Price Changes 122 Market Reaction to Information
Events 130 Market Anomalies 134 Evidence on Insiders and Investment
Professionals 142 Conclusion 149 Questions and Short Problems 150 CHAPTER 7
Riskless Rates and Risk Premiums 154 The Risk-Free Rate 154 Equity Risk
Premium 159 Default Spreads on Bonds 177 Conclusion 180 Questions and Short
Problems 180 CHAPTER 8 Estimating Risk Parameters and Costs of Financing
182 The Cost of Equity and Capital 182 Cost of Equity 183 From Cost of
Equity to Cost of Capital 210 Best Practices at Firms 221 Conclusion 222
Questions and Short Problems 223 CHAPTER 9 Measuring Earnings 229
Accounting versus Financial Balance Sheets 229 Adjusting Earnings 230
Conclusion 247 Questions and Short Problems 249 CHAPTER 10 From Earnings to
Cash Flows 250 The Tax Effect 250 Reinvestment Needs 258 Conclusion 268
Questions and Short Problems 269 CHAPTER 11 Estimating Growth 271 The
Importance of Growth 272 Historical Growth 272 Analyst Estimates of Growth
282 Fundamental Determinants of Growth 285 Qualitative Aspects of Growth
301 Conclusion 302 Questions and Short Problems 302 CHAPTER 12 Closure in
Valuation: Estimating Terminal Value 304 Closure in Valuation 304 The
Survival Issue 318 Closing Thoughts on Terminal Value 320 Conclusion 321
Questions and Short Problems 321 CHAPTER 13 Dividend Discount Models 323
The General Model 323 Versions of the Model 324 Issues in Using the
Dividend Discount Model 344 Tests of the Dividend Discount Model 345
Conclusion 348 Questions and Short Problems 349 CHAPTER 14 Free Cash Flow
to Equity Discount Models 351 Measuring What Firms Can Return to Their
Stockholders 351 FCFE Valuation Models 357 FCFE Valuation versus Dividend
Discount Model Valuation 372 Conclusion 376 Questions and Short Problems
376 CHAPTER 15 Firm Valuation: Cost of Capital and Adjusted Present Value
Approaches 380 Free Cash flow to the Firm 380 Firm Valuation: The Cost of
Capital Approach 383 Firm Valuation: The Adjusted Present Value Approach
398 Effect of Leverage on Firm Value 402 Adjusted Present Value and
Financial Leverage 415 Conclusion 419 Questions and Short Problems 419
CHAPTER 16 Estimating Equity Value per Share 423 Value of Nonoperating
Assets 423 Firm Value and Equity Value 440 Management and Employee Options
442 Value per Share When Voting Rights Vary 448 Conclusion 450 Questions
and Short Problems 451 CHAPTER 17 Fundamental Principles of Relative
Valuation 453 Use of Relative Valuation 453 Standardized Values and
Multiples 454 Four Basic Steps to Using Multiples 456 Reconciling Relative
and Discounted Cash Flow Valuations 466 Conclusion 467 Questions and Short
Problems 467 CHAPTER 18 Earnings Multiples 468 Price-Earnings Ratio 468 The
PEG Ratio 487 Other Variants on the PE Ratio 497 Enterprise Value to EBITDA
Multiple 500 Conclusion 508 Questions and Short Problems 508 CHAPTER 19
Book Value Multiples 511 Price-to-Book Equity 511 Applications of
Price-Book Value Ratios 521 Use in Investment Strategies 530 Value-to-Book
Ratios 532 Tobin's Q: Market Value/Replacement Cost 537 Conclusion 539
Questions and Short Problems 539 CHAPTER 20 Revenue Multiples and
Sector-Specific Multiples 542 Revenue Multiples 542 Sector-Specific
Multiples 571 Conclusion 577 Questions and Short Problems 577 CHAPTER 21
Valuing Financial Service Firms 581 Categories of Financial Service Firms
581 What is Unique about Financial Service Firms? 582 General Framework for
Valuation 583 Discounted Cash Flow Valuation 584 Asset-Based Valuation 599
Relative Valuation 599 Issues in Valuing Financial Service Firms 605
Conclusion 607 Questions and Short Problems 608 CHAPTER 22 Valuing Firms
with Negative or Abnormal Earnings 611 Negative Earnings: Consequences and
Causes 611 Valuing Negative Earnings Firms 615 Conclusion 639 Questions and
Short Problems 639 CHAPTER 23 Valuing Young or Start-Up Firms 643
Information Constraints 643 New Paradigms or Old Principles: A Life Cycle
Perspective 644 Venture Capital Valuation 646 General Framework for
Analysis 648 Value Drivers 659 Estimation Noise 661 Implications for
Investors 662 Implications for Managers 663 The Expectations Game 663
Conclusion 665 Questions and Short Problems 666 CHAPTER 24 Valuing Private
Firms 667 What Makes Private Firms Different? 667 Estimating Valuation
Inputs at Private Firms 668 Valuation Motives and Value Estimates 688
Valuing Venture Capital and Private Equity Stakes 693 Relative Valuation of
Private Businesses 695 Conclusion 699 Questions and Short Problems 699
CHAPTER 25 Aquisitions and Takeovers 702 Background on Acquisitions 702
Empirical Evidence on the Value Effects of Takeovers 705 Steps in an
Acquisition 705 Takeover Valuation: Biases and Common Errors 724
Structuring the Acquisition 725 Analyzing Management and Leveraged Buyouts
730 Conclusion 734 Questions and Short Problems 735 CHAPTER 26 Valuing Real
Estate 739 Real versus Financial Assets 739 Discounted Cash Flow Valuation
740 Comparable/Relative Valuation 759 Valuing Real Estate Businesses 761
Conclusion 763 Questions and Short Problems 763 CHAPTER 27 Valuing Other
Assets 766 Cash-Flow-Producing Assets 766 Non-Cash-Flow-Producing Assets
775 Assets with Option Characteristics 777 Conclusion 778 Questions and
Short Problems 779 CHAPTER 28 The Option to Delay and Valuation
Implications 781 The Option to Delay a Project 781 Valuing a Patent 789
Natural Resource Options 796 Other Applications 802 Conclusion 802
Questions and Short Problems 803 CHAPTER 29 The Options to Expand and to
Abandon: Valuation Implications 805 The Option to Expand 805 When Are
Expansion Options Valuable? 812 Valuing a Firm with the Option to Expand
815 Value of Financial Flexibility 817 The Option to Abandon 820
Reconciling Net Present Value and Real Option Valuations 823 Conclusion 823
Questions and Short Problems 824 CHAPTER 30 Valuing Equity in Distressed
Firms 826 Equity in Highly Levered Distressed Firms 826 Implications of
Viewing Equity as an Option 828 Estimating the Value of Equity as an Option
831 Consequences for Decision Making 836 Conclusion 839 Questions and Short
Problems 839 CHAPTER 31 Value Enhancement: A Discounted Cash Flow Valuation
Framework 841 Value-Creating and Value-Neutral Actions 841 Ways of
Increasing Value 842 Value Enhancement Chain 859 Closing Thoughts on Value
Enhancement 864 Conclusion 865 Questions and Short Problems 865 CHAPTER 32
Value Enhancement: Economic Value Added, Cash Flow Return on Investment,
and Other Tools 869 Economic Value Added 870 Cash Flow Return on Investment
884 A Postscript on Value Enhancement 890 Conclusion 891 Questions and
Short Problems 891 CHAPTER 33 Probabilistic Approaches in Valuation:
Scenario Analysis, Decision Trees, and Simulations 894 Scenario Analysis
894 Decision Trees 899 Simulations 908 An Overall Assessment of
Probabilistic Risk-Assessment Approaches 919 Conclusion 921 Questions and
Short Problems 921 CHAPTER 34 Overview and Conclusion 925 Choices in
Valuation Models 925 Which Approach Should You Use? 926 Choosing the Right
Discounted Cash Flow Model 929 Choosing the Right Relative Valuation Model
933 When Should You Use the Option Pricing Models? 937 Conclusion 938
References 939 Index 954

---

Chapter 1 Introduction to Valuation 1

A Philosophical Basis for Valuation 1

Generalities about Valuation 2

The Role of Valuation 6

Conclusion 9

Questions and Short Problems 9

Chapter 2 Approaches to Valuation 11

Discounted Cash Flow Valuation 11

Relative Valuation 19

Contingent Claim Valuation 23

Conclusion 25

Questions and Short Problems 25

Chapter 3 Understanding Financial Statements 27

The Basic Accounting Statements 27

Asset Measurement and Valuation 29

Measuring Financing Mix 36

Measuring Earnings and Profitability 42

Measuring Risk 47

Other Issues in Analyzing Financial Statements 53

Conclusion 55

Questions and Short Problems 55

Chapter 4 The Basics of Risk 58

What is Risk? 58

Equity Risk and Expected Return 59

Alternative Models for Equity Risk 71

A Comparative Analysis of Equity Risk Models 76

Models of Default Risk 77

Conclusion 81

Questions and Short Problems 82

Chapter 5 Option Pricing Theory and Models 87

Basics of Option Pricing 87

Determinants of Option Value 89

Option Pricing Models 90

Extensions of Option Pricing 107

Conclusion 109

Questions and Short Problems 109

Chapter 6 Market Efficiency--Definition, Tests, and Evidence 111

Market Efficiency and Investment Valuation 111

What Is an Efficient Market? 112

Implications of Market Efficiency 112

Necessary Conditions for Market Efficiency 114

Propositions about Market Efficiency 114

Testing Market Efficiency 116

Cardinal Sins in Testing Market Efficiency 120

Some Lesser Sins That Can Be a Problem 121

Evidence on Market Efficiency 122

Time Series Properties of Price Changes 122

Market Reaction to Information Events 130

Market Anomalies 134

Evidence on Insiders and Investment Professionals 142

Conclusion 149

Questions and Short Problems 150

Chapter 7 Riskless Rates and Risk Premiums 154

The Risk-Free Rate 154

Equity Risk Premium 159

Default Spreads on Bonds 177

Conclusion 180

Questions and Short Problems 180

Chapter 8 Estimating Risk Parameters and Costs of Financing 182

The Cost of Equity and Capital 182

Cost of Equity 183

From Cost of Equity to Cost of Capital 210

Best Practices at Firms 221

Conclusion 222

Questions and Short Problems 223

Chapter 9 Measuring Earnings 229

Accounting versus Financial Balance Sheets 229

Adjusting Earnings 230

Conclusion 247

Questions and Short Problems 249

Chapter 10 From Earnings to Cash Flows 250

The Tax Effect 250

Reinvestment Needs 258

Conclusion 268

Questions and Short Problems 269

Chapter 11 Estimating Growth 271

The Importance of Growth 272

Historical Growth 272

Analyst Estimates of Growth 282

Fundamental Determinants of Growth 285

Qualitative Aspects of Growth 301

Conclusion 302

Questions and Short Problems 302

Chapter 12 Closure in Valuation: Estimating Terminal Value 304

Closure in Valuation 304

The Survival Issue 318

Closing Thoughts on Terminal Value 320

Conclusion 321

Questions and Short Problems 32

Rezensionen

"Aswath Damodaran's work is always worth reading.... For investors and students of the financial markets who want to embark on serious fundamental analysis, it is critical to understand how to go about valuing stocks and other instruments. There is no short cut.... Damodaran's Investment Valuation explains the hard work part." (Seeking Alpha, May 2012)