Mckinsey book valuation method

CFA Level II
#1

Hi all, Do you know where this method of valuation is covered in the curriculum or somebody has got a tutorial on it. Essentially, discounted economic profit at firm level. Many thanks S

#2

Have a look in Corporate Finance - Capital Budgeting.

#3

Isn’t it some variation of discounted EVA?

#4

I thought EVA was a variation of economic profit as defined NOPAT less a total capital charge based on WACC. EVA includes accounting adjustments.

#5

Yes it is indeed discounted EVA. Mckinsey says Economic profit to the same thing- perhaps they don’t want to use Stern Stew word. I have got the Mckinsey book. Apparently is so verbose that I gave up. Do you know where it is in L2 curriculum. Apparently morgan stanley research mostly use the same thingy- ROIC, NOPLAT RONIC kind of stuff. Thanks S

#6

I read both the McKinsey book and the cfai reading, I believe it is in corp fin, but the CFAi coverage is pretty brief although it gets the point accross. What do you need the mckinsey book for, are you taking msf somewhere, if so where?

#7

You may also want to visit the EVA/RI sections of the equity book as well.

#8

I had the Mckinsey book during the MBA. It was taught by the author himself in the class. Just thought of revising as I found some/Morgan Stanley uses that thing verbatim. Somehow it is so accounting intensive that I am avoiding, that is why I was hoping CFAI might have covered in better way. S

#9

saurya, Which school did you get your MBA from ?

#10

Oxford and still unemployed!

#11

saurya_s Wrote: ------------------------------------------------------- > Oxford and still unemployed! are you joking? if so, why are you still reading books?

#12

I am trying to find job (London) but no success yet. I have an advanced degree in healthcare, so I won’t fit in any other sector and most importantly people are not willing to take me in any other sector. So just reading for CFA while doing interviews. Overqualified and unemplyed- after having degrees from Oxford and Cambridge !

#13

sorry to hear that. I thought healthcare was a booming sector around the world, or atleast in developed countries

#14

Nope, well in London there are far more people than required and employer are able to find experienced person, so i am not first in the Q. Actually one employer told me explicitly that if the first choice will not join then they will consider me. Well, if you have some pointer then let me know. Thanks S

#15

there is a healthcare associate job advertised in Toronto, Canada (on the CFAI jobline)

#16

Thanks engineer2finance. Very kind of you. Well if you and other guys come across anything in the UK for pharma/biotech/healthcare, then please let me know. S