Chapter 11: Model Testing for Reasonableness and Accuracy
In Chapter 10, Valuation, we built a complete Discounted Cash Flow (DCF) valuation model and obtained alternative valuations with trading and transaction comparatives. We also prepared a football field chart to interpret our results.
In the process of building our model, we made a number of assumptions based on our experience, historical financials, and discussions with management. We recognize that we could have selected a different set of assumptions from the same information so it is only right that we test our model as it is for reasonableness and accuracy.
In order to reduce the effects of the subjectivity inherent in your model, you will need to adopt certain procedures, some of ...
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