Daves, Phillip R. : University of Tennessee

Ehrhardt, Michael C. : University of Tennessee

Shrieves, Ron E. : University of Tennessee

This book has two significant advantages relative to other books and software on the topic of valuation. First, the expository approach of the authors is very user-friendly, with a pedagogy designed to build confidence. They begin with a very simple, but complete example in the first couple of chapters that takes the reader through the valuation of a company. They repeat the analysis for a slightly more complicated company in chapters 3-4. A repeat of the analysis is then completed in chapters 5-8 for an even more complicated company. This iterative approach allows the reader to absorb "digestible" amounts of material before moving on to the next level of complication. The second pedagogic advantage is the structure of their spreadsheet valuation model. They show the reader how to get real world data, and how to cut-and-paste it into their spreadsheet. The spreadsheet simplifies the complex accounting found in most actual companies' financial statements and condenses it into a simplified set of standardized financial statements. This allows the user to concentrate on the fundamental economic forces that underlie a company's value.

Benefits:

• Initial chapters are simple enough for readers with minimum background in accounting and finance, and subsequent chapters develop sophisticated skills in projecting financial statements and evaluating cash flows for actual companies.
• Builds a complete valuation framework as applied to a very simple company. Then progresses to slightly more complex companies, and ultimately leads the reader through the valuation of actual company with user-friendly spreadsheet-based valuation model that accompanies the book.
• The audience for this product falls across a range --- from the novice investor to the professional analyst to the corporate manager to the academic professor teaching investments, corporate finance, or valuation-oriented accounting courses.

PART I: BASIC CONCEPTS OF CORPORATE VALUATION.

1. Why Corporate Valuation?
2. A Complete Corporate Valuation for a Simple Company.
Appendix 2. Comparing Bond and Stock Valuation Models with the Corporate Valuation
Model.

PART II: INTERMEDIATE CONCEPTS OF CORPORATE VALUATION.

3. Financial Statements and Free Cash Flow.
Appendix 3. Reconciling Free Cash Flow with the Statement of Cash Flows.
4. Estimating the Value of ACME.
Appendix 4. Security Valuation.

PART III: PROJECTING FINANCIAL STATEMENTS.

5. Projecting Free Cash Flows.
6. Projecting Consistent Financial Statements: The Miracle of Accounting.
7. Multiyear Projections and Valuation.
8. Technical Issues in Projecting Financial Statements and Forecasting Financing
Needs.

PART IV: VALUING ACTUAL COMPANIES WITH THE CORPORATE VALUATION SPREADSHEET.

9. The Starting Point for Corporate Valuation: Historical Financial Statements.
Appendix 9. Why We Condense the Financials.
10. The Condensed Financial Statements and Historical Analysis.
Appendix 10. Mapping the Comprehensive Statements to the Condensed Statements:
Advanced Issues in Measuring Free Cash Flows.
11. Estimating the Weighted Average Cost of Capital.
12. Projecting Cash Flows for an Actual Company: Home Depot.
Appendix 12. Top-Down Analysis.
13. The Valuation of an Actual Company: Home Depot.
Appendix 13. The Adjusted Present Value Method.