I am pleased to write the Foreword for the second edition of this important finance textbook. The revisions and additions made since the first edition offer, in language consistent with the theme of the text, “significant added value.”
Much has changed in the investment world since publication of the first edition. The consequences of the most dramatic disruption in capital markets and the global banking system since the 1930s will be felt for years to come. The materials have been suitably updated, now offering lengthier discussion on several topics, including free cash flow valuation, enterprise value multiples, and private company valuation. At the same time the revision is faithful to the vision of the first edition of an equity valuation text drawing equally and deeply on accounting and finance knowledge and analysis. Indeed, it is most satisfying to recognize that the underlying thesis of the book has been borne out during this difficult period. That is, careful analysis of the underlying value of assets and review of related risks underlie long-term investment success.
The title, Equity Asset Valuation, is clear and direct. So too is the content of this volume. The emphasis is on rigorous, but commonsense, approaches to investment decision making. It is aimed at professional investors and serious students. Even so, individuals with some basic knowledge of mathematics and statistics will benefit from the volume’s key themes and conclusions.
The writers are recognized ...