Valuation Workbook: Step-by-Step Exercises and Tests to Help You Master Valuation, 4th Edition

by McKinsey & Company Inc.; Tim Koller; Marc Goedhart; David Wessels; Jeffrey P. Lessard

• ISBN13: 9780471702160
• ISBN10: 0471702161
• Edition: 4th
• Format: Paperback
• Copyright: 2006-05-01
• Publisher: Wiley

Summary

The Ideal Companion to VALUATION FOURTH EDITION If you want to get more out of Valuation, Fourth Edition, then pick up the Valuation Workbook. This comprehensive study guide provides you with an invaluable opportunity to explore your understanding of the strategies and techniques covered in the main text, before putting it to work in real-world situations. This hands-on Workbook: * Walks you through Valuation, Fourth Edition--providing chapter-by-chapter coverage of the core text * Tests your comprehension of the ideas presented throughout, with multiple-choice questions and problems * Offers complete coverage of forecasting short, medium, and continuing value; calculating and interpreting results; real option pricing methods; and much more Valuation Workbook is filled with a wealth of practical learning exercises and information that will help you understand and apply the proven principles found in Valuation, Fourth Edition.

Author Biography

McKINSEY & COMPANY is a management consulting firm that helps leading corporations and organizations make distinctive, lasting, and substantial improvements in their performance. Over the past seven decades, the firm's primary objective has remained constant: to serve as an organization's most trusted external advisor on critical issues facing senior management. With consultants deployed from over eighty offices in more than forty countries, McKinsey advises companies on strategic, operational, organizational, financial, and technological issues. The firm has extensive experience in all major industry sectors and primary functional areas, as well as in-depth expertise in high-priority areas for today's business leaders.

Tim Koller is a partner in McKinsey's New York office. Tim has served clients in North America and Europe on corporate strategy and issues concerning capital markets, M&A transactions, and value-based management. He leads the firm's research activities in valuation and capital markets issues. He received his MBA from the University of Chicago.

Marc Goedhart is an associate principal in McKinsey's Amsterdam office. Marc has served clients across Europe on portfolio restructuring, issues concerning capital markets, and M&A transactions. He received a PhD in finance from Erasmus University Rotterdam.

David Wessels is an Adjunct Professor of Finance and director of executive education at the Wharton School of the University of Pennsylvania. Named by BusinessWeek as one of America's top business school instructors, he teaches corporate valuation at the MBA and Executive MBA levels. David received his PhD from the University of California at Los Angeles.

Jeffrey P. Lessard, CFA, is Associate Professor of Finance and Accounting at the Rochester Institute of Technology. Dr. Lessard received his PhD in finance from the Sam M. Walton College of Business at the University of Arkansas. His primary scholarly interests are in the areas of corporate valuation, the influence of the board of directors on the creation of shareholder value, portfolio performance, and performance and presentation standards in the investment industry.

Table of Contents

Introduction	ix
Part One Questions
Why Maximize Value?	3	(3)
The Value Manager	6	(4)
Fundamental Principles of Value Creation	10	(3)
Do Fundamentals Really Drive the Stock Market?	13	(2)
Frameworks for Valuation	15	(3)
Thinking-about Return on Invested Capital and Growth	18	(1)
Analyzing Historical Performance	19	(6)
Forecasting Performance	25	(3)
Estimating Continuing Value	28	(7)
Estimating the Cost of Capital	35	(4)
Calculating and Interpreting Results	39	(2)
Using Multiples for Valuation	41	(2)
Performance Measurement	43	(2)
Performance Management	45	(3)
Creating Value through Mergers and Acquisitions	48	(3)
Creating Value through Divestitures	51	(2)
Capital Structure	53	(2)
Investor Communications	55	(2)
Valuing Multibusiness Companies	57	(2)
Valuing Flexibility	59	(2)
Cross-Border Valuation	61	(2)
Valuation in Emerging Markets	63	(7)
Valuing High-Growth Companies	70	(2)
Valuing Cyclical Companies	72	(9)
Valuing Financial Institutions	81	(10)
Part Two Answers
Why Maximize Value?	91	(2)
The Value Manager	93	(4)
Fundamental Principles of Value Creation	97	(2)
Do Fundamentals Really Drive the Stock Market?	99	(3)
Frameworks-for Valuation	102	(4)
Thinking about Return on Invested Capital and Growth	106	(1)
Analyzing Historical Performance	107	(8)
Forecasting Performance	115	(7)
Estimating Continuing Value	122	(9)
Estimating the Cost of Capital	131	(3)
Calculating and Interpreting Results	134	(2)
Using Multiples for Valuation	136	(2)
Performance Measurement	138	(2)
Performance Management	140	(3)
Creating Value through Mergers and Acquisitions	143	(3)
Creating Value through Divestitures	146	(3)
Capital Structure	149	(3)
Investor Communications	152	(2)
Valuing Multibusiness Companies	154	(2)
Valuing Flexibility	156	(2)
Cross-Border Valuation	158	(2)
Valuation in Emerging Markets	160	(8)
Valuing High-Growth Companies	168	(2)
Valuing Cyclical Companies	170	(9)
Valuing Financial Institutions	179