ECONOMIC-FINANCIAL PLANNING
Academic Year 2023/2024 - Teacher: Davide RIZZOTTIExpected Learning Outcomes
This is a class about valuation, not about instruments, markets or investing. It is about valuing small businesses and big ones, simple businesses and complex ones, young firms and those in distress. It is about valuation in all its many forms and I hope that by the end of this class, you can value just about anything that has a value and price just about everything else.
Detailed Course Content
The valuation philosophy; Subjective Biases; Fundamentals: rates, returns, growth; Rates; Valuation approaches: intrinsic, relative and contingent; Business valuation in professional applications; Leasing; Project financing. Case studies.
Textbook Information
- A. Damodaran, “Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, 3rd ed., Wiley (University edition);
- Support materials from the teacher.
Course Planning
| Subjects | Text References | |
|---|---|---|
| 1 | Course presentation. Introduction to Valuation | Text 1: chapter 1 |
| 2 | Valuation: how much detail? Valuation approaches | Text 1: chapter 2 |
| 3 | DCF: valutation choices. DCF: the consistency principles | Text 2 |
| 4 | Dividend, FCFE and FCFF models | Text 1: chapter 13; Text 1: chapter 14 |
| 5 | Inputs for valuation: the risk-free rate | Text 1: chapter 7 |
| 6 | Equity risk premiums. Bottom-up beta: the approach | Text 1: chapter 7 |
| 7 | Cost of debt. Debt ratios | Text 2 |
| 8 | Cost of capital. Earnings and cash flows | Text 1: chapter 8; Text 1: chapter 10 |
| 9 | More on cash flows | Text 2 |
| 10 | Fundamental growth rates | Text 1: chapter 11 |
| 11 | Terminal value: approaches and constraints | Text 1: chapter 12 |
| 12 | Dealing with cross holdings and other assets | Text 1: chapter 16 |
| 13 | Complexity | Text 2 |
| 14 | Management options | Text 1: chapter 16 |
| 15 | Macro effects on valuation | Text 2 |
| 16 | The Dark Side of Valuation: valuing young, startup companies | Text 1: chapter 23 |
| 17 | The Dark Side of Valuation: valuing mature companies in transition, declining and distressed companies | Text 2 |
| 18 | The Dark Side of Valuation: valuing emerging market companies | Text 2 |
| 19 | The Dark Side of Valuation: valuing financial service companies and cyclical & commodities companies | Text 2 |
| 20 | Pricing vs. Valuation | Text 2 |
| 21 | Relative valuation | Text 1: chapter 17 |
| 22 | Deconstructing multiples. Equity side and asset side multiples. | Text 1: chapter 18; Text 1: chapter 19 |
| 23 | Analyzing multiples | Text 1: chapter 18; Text 1: chapter 19; Text 1: chapter 20 |
| 24 | Finding comparables | Text 2 |
| 25 | Market regressions. Choosing the right multiple | Text 2 |
| 26 | Relative vs. Intrinsic valuation. Private business valuation | Text 1: chapter 24 |
| 27 | Value enhancement vs. Price enhancement. The drivers of value. The expected value of control | Text 2 |
| 28 | Equity valuation Project | |
| 29 | Stock screening Project | |
| 30 | Course closing |