Concept Guide
DCF: Theory and Mechanics
A DCF (Discounted Cash Flow) model is the most principled way to value a business.
12 min readRead more
Valuation
DCF, relative valuation, sum-of-the-parts, and the mistakes that recur.
6 guides. Read in order, or jump to what you need.
Concept Guide
Relative Valuation (P/E, EV/EBITDA, P/B, EV/Sales)
Relative valuation prices a company by comparing it to similar companies or recent transactions.
10 min readRead more
Concept Guide
Sum-of-the-Parts
Some companies operate multiple, very different businesses, a conglomerate might own a cement plant, a hospitality chain, and a financial services arm.
8 min readRead more
Concept Guide
Sector-Specific Valuation (Banks, Insurance, Real Estate)
The same valuation multiple applied to a bank and a software company would be meaningless.
11 min readRead more
Concept Guide
Terminal Value Approaches
In most DCF models, the terminal value, the value attributed to cash flows beyond the explicit forecast period, accounts for 60–80% of total enterprise value.
9 min readRead more
Concept Guide
Common DCF Mistakes
DCF is the most rigorous valuation framework, and the most abused. Because it accepts any inputs you choose, it can be used...
8 min readRead more