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What’s a Company Worth?

What’s a Company Worth?. Fundamental analysis: Value is sum of Book value Future returns, or “intrinsic” value. Intrinsic Value. “future income generated by the asset, and discounting it to the present value.” sum(dividend * gamma^i ) = dividend * 1/(1-gamma). Book Value.

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What’s a Company Worth?

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  1. What’s a Company Worth? • Fundamental analysis: Value is sum of • Book value • Future returns, or “intrinsic” value

  2. Intrinsic Value • “future income generated by the asset, and discounting it to the present value.” • sum(dividend*gamma^i) • = dividend * 1/(1-gamma)

  3. Book Value • “total assets minus intangible assets and liabilities.”

  4. What’s a Company Worth? • Why not ask the market? • How does the market know? • value = #shares outstanding * price • S&P 500

  5. Objective Recap: • Understand multiple methods of estimating a company’s value: • Market cap • Future dividends • Book value

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