I thought this would be a good thread to start to help everyone out - especially those who are behind trying to make sense of this stuff. As I’ve been reading through the books I’ve noticed a lot of overlap and relations b/w different topics. Some of these are obvious, such as: The Free Cash Flow Method (Private Company Valuation) is the same as valuing a public company using FCFF or FCFE (Equity); however, this is NOT the same as FCF in Corp Finance. Corp Fin FCF starts by adjusting NI to NOPLAT first. small difference, but if CFAI askes me a Q on Corp. Fin. about FCF I’m doing it the CFAI way! or The EEM (also Private Co. Valuation) is the same as RI (Equity) which is also the same a EP(Corp. Finance). Some that are not as obvious include: Discounting an analysts forecasts(PM) uses the coefficient of determination (Quant) to aquire the “shrinkage factor” that a port folio manager applies to future forecasts by the analyst. or Asset Beta (LBO Valuation) is fundamentally the same as unlevered Beta (Equity), given the assumption, as in the book, that debt beta is 0. ---------------------------------------------------------------- What other similarities does everryone see that transcend topic areas?
FinNinja Wrote: ------------------------------------------------------- > The EEM (also Private Co. Valuation) is the same > as RI (Equity) which is also the same a EP(Corp. > Finance). > Dude these aren’t the same. They are similar, but not the same. EEM - different charge for different asset components. RI - equity charge for book value EP - charge to NOPAT and uses the WACC
good call soddy! - though they are pretty close! Also in the Corp finance book it does mention these should be equivalent in theory, but in practice can disagree about actual valuations. also, anyone else notice that the value of a fwd or futures currency contract is the same as the IRP formula? With enough of these similarities b/w concepts I bet we could cut these books in half!