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Mastering Cash Flow and Valuation Modelling by Alastair Day

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13

Other approaches

Method

Book value

Adjusted book value

Market value

Multiples

Peer data

Summary

METHOD

The discounted cash flow sheet computes a valuation from the forecasted cash flows as 32,221; however, it is useful as a comparison to consider other valuation methods or other companies in the same sector. An optimistic forecast can produce a high valuation relative to book or market values. Alternatively, a takeover can result in a high market value because of scarcity or takeover premiums. This chapter looks at accounting, market and peer groups to add a set of comparison figures.

BOOK VALUE

Copy a template sheet and rename it Market. Most of the share and market information is available on earlier sheets and you can bring it forward ...

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