Great Lecture, you go through it so fast but everything made sense because you always give your reasons. I'm surprised I didn't even have to rewind. Awesome!
This is an incredibly helpful tutorial! Thank you so much. I was reading the book on my own and it's relatively confusing doing it solo. Having you take me through it and bringing in your own examples really clarifies things.
If you're just gonna use the consensus estimates from an equity research paper, may as well take their DCF whilst your at it. Surely you don't want to come up with the exact same analysis? Love to see some modelling videos for revenue (bottom up/ top down)( including projections for fx, M&A and whatever else might impact etc.)
Thanks for watching, my video on the cost of capital thoroughly covers the CAPM formula. Please check this video description for that link. With regards to the capital market line and separation theorem, I'll put it on the list for the next few months!
Thank you. It was very helpful lecture. As you said making your own projections take a lot of time and therefore it is sometimes better to use other's estimations. But can anyone provide me with reliable sources where I can find consensus research estimates and equity research reports?
I must be missing something here. You say EBIT is Before taxes, then when calculating FCF you say Ebit minus taxes. Which taxes if Ebit is without taxes!?
such an awesome video thank you so much for that, i have a question though, regarding the sensitivity analysis, you only used the Exit multiples and not the PGM as well, would you please explain that a little bit more.
Thanks for watching! The book used the exit multiple whereas you could also use the long-term growth rate (ie.PGM), all depends on what variables you choose to select in excel. The actual process of building the sensitivity analysis is relatively simple and there are several videos covering the topic. Essentially what the model does is use Excel's what-if analysis to change variables in the model and see how that impacts the final projection. I didn't spend too much time on that because I am not a fan of the common inputs of the sensitivity analysis. Here's the problem, consider a hypothetical scenario where I am a client and I wanted to review your valuation using only the sensitivity analysis. Would looking at inputs like WACC, beta, cost of equity, and the long-term growth rate tell me anything about the actual performance of the business and what the business needs to produce in order to support such a valuation? Would I be able to understand how you view that business performing? If you watch another one of my videos called "Why is my DCF model incorrect?" you will see that one of the common flaws in any analysis is the sensitivity analysis. Usually, the numbers presented don't make any sense to the buyer using this information because they haven't spent hours looking at the model. Considering performance drivers that actually influence FCF and thus the value of the business is much more relevant for me as an outsider. This means looking at changes in profit margin, cost structure, capex, etc. The focus should be on above the FCF line in order to understand how the analyst projected FCF. The moment you focus on WACC and things after FCF projection, there are dozens of assumptions that I would need to understand before really appreciating the value of such an analysis.
Great Lecture, you go through it so fast but everything made sense because you always give your reasons. I'm surprised I didn't even have to rewind. Awesome!
The BEST explanation of DCF on youtube!!
damodaran
This is an incredibly helpful tutorial! Thank you so much.
I was reading the book on my own and it's relatively confusing doing it solo. Having you take me through it and bringing in your own examples really clarifies things.
Great tutorial. It’s always wise to be roughly right than precisely wrong.
If you're just gonna use the consensus estimates from an equity research paper, may as well take their DCF whilst your at it. Surely you don't want to come up with the exact same analysis? Love to see some modelling videos for revenue (bottom up/ top down)( including projections for fx, M&A and whatever else might impact etc.)
Thank you very much for providing a comprehensive DCF tutorial! It is super helpful !
The way you explained the DSO Method at 44:16 it is the same as estimating the A/R by a % Sales method.
Thank you so much. It's extremely helpful, it has covered all the conceptual points that I do need not just stick to how to calculate but why.
Appreciated of applying DCF Approach. It will be good if companies like Google, Apples, Amazon etc. to be detailed calculated by means of DCF.
Thank you so much!!!!!!!!!!! This will really help me with my finals
thank you so so so so much
No problem, thanks for watching. Good luck with school!
Hi, you are Khan Academy of IB. Plz, upload the CH:5 and 7 of this book. I really appreciate your time and efforts.
Thanks
This is amazing! Thank you!
Please also make a video on the DCF Model for cyclic business.
Could you please produce a video about the fundamentals, e.g. the CAPM, capital market line, separation theorem, etc.?
Thanks for watching, my video on the cost of capital thoroughly covers the CAPM formula. Please check this video description for that link. With regards to the capital market line and separation theorem, I'll put it on the list for the next few months!
really good video
Very comprehensive. Thank you! Also checked out your seeking alpha profile, you haven’t posted in a while but you old research is splendid.
Thank you, great explanation!
amazing !
How can we get the excel files used in the books?
In-depth explanation but would have been better if more practical exercises included!
Thank you. It was very helpful lecture.
As you said making your own projections take a lot of time and therefore it is sometimes better to use other's estimations. But can anyone provide me with reliable sources where I can find consensus research estimates and equity research reports?
Good
I must be missing something here. You say EBIT is Before taxes, then when calculating FCF you say Ebit minus taxes. Which taxes if Ebit is without taxes!?
can we get excel file created in video?
such an awesome video thank you so much for that, i have a question though, regarding the sensitivity analysis, you only used the Exit multiples and not the PGM as well, would you please explain that a little bit more.
Thanks for watching! The book used the exit multiple whereas you could also use the long-term growth rate (ie.PGM), all depends on what variables you choose to select in excel. The actual process of building the sensitivity analysis is relatively simple and there are several videos covering the topic. Essentially what the model does is use Excel's what-if analysis to change variables in the model and see how that impacts the final projection.
I didn't spend too much time on that because I am not a fan of the common inputs of the sensitivity analysis. Here's the problem, consider a hypothetical scenario where I am a client and I wanted to review your valuation using only the sensitivity analysis. Would looking at inputs like WACC, beta, cost of equity, and the long-term growth rate tell me anything about the actual performance of the business and what the business needs to produce in order to support such a valuation? Would I be able to understand how you view that business performing?
If you watch another one of my videos called "Why is my DCF model incorrect?" you will see that one of the common flaws in any analysis is the sensitivity analysis. Usually, the numbers presented don't make any sense to the buyer using this information because they haven't spent hours looking at the model. Considering performance drivers that actually influence FCF and thus the value of the business is much more relevant for me as an outsider. This means looking at changes in profit margin, cost structure, capex, etc. The focus should be on above the FCF line in order to understand how the analyst projected FCF. The moment you focus on WACC and things after FCF projection, there are dozens of assumptions that I would need to understand before really appreciating the value of such an analysis.
Where are the Excel tools?
What microphone do you use to record your videos?!
please share the slides you used in the vedio
Where can we download slides from?
Did you got the same?