Financial Analysis. Lesson 5. Valuation Techniques and Methods
<ol>
<li>Valuation determines an asset's worth based on various financial metrics.
</li>
<li>Discounted cash flow (DCF) calculates present value of future cash flows.
</li>
<li>Comparable company analysis (CCA) values a company using peer group comparisons.
</li>
<li>Precedent transactions involve analyzing past sales of similar companies.
</li>
<li>Enterprise value (EV) sums market capitalization, debt, and cash reserves.
</li>
<li>Equity value represents the value of a company’s common shares.
</li>
<li>Earnings before interest and tax (EBIT) measures core operating profitability.
</li>
<li>Residual income model values equity based on excess profits over equity costs.
</li>
<li>Price-to-sales ratio (P/S) compares a company’s stock price to its revenue.
</li>
<li>Sum-of-the-parts valuation values each business segment separately, then combines totals.
</li>
</ol>
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Technical Examples:
<ol>
<li>Using DCF analysis, analysts determine if an asset is fairly priced.
</li>
<li>CCA helps assess a company's value based on industry benchmarks.
</li>
<li>Residual income model estimates equity value through excess profit evaluation.
</li>
</ol>

**Financial Analysis. Lesson 5. Valuation Techniques and Methods**

1. **Valuation** determines an asset's worth based on various financial metrics.
    
2. **Discounted cash flow (DCF)** calculates present value of future cash flows.
    
3. **Comparable company analysis (CCA)** values a company using peer group comparisons.
    
4. **Precedent transactions** involve analyzing past sales of similar companies.
    
5. **Enterprise value (EV)** sums market capitalization, debt, and cash reserves.
    
6. **Equity value** represents the value of a company’s common shares.
    
7. **Earnings before interest and tax (EBIT)** measures core operating profitability.
    
8. **Residual income model** values equity based on excess profits over equity costs.
    
9. **Price-to-sales ratio (P/S)** compares a company’s stock price to its revenue.
    
10. **Sum-of-the-parts valuation** values each business segment separately, then combines totals.
    

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**Technical Examples:**

1. Using **DCF analysis**, analysts determine if an asset is fairly priced.
    
2. **CCA** helps assess a company's value based on industry benchmarks.
    
3. **Residual income model** estimates equity value through excess profit evaluation.

Financial Analysis. Lesson 5. Valuation Techniques and Methods.