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Free Cash Flow Analysis

In this course, learners will begin to apply the lessons and concepts from Introduction to Corporate Finance as they begin to discuss basics of firm valuation.

Follow Professor Wolfenzon's lead to learn how the free cash flow method is applied to value firms. You will also learn about valuation using multiples. Throughout the course, you will learn how to construct Excel models to value firms by completing hands on activities.

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What's inside

Learning objectives

How to value a firm using the enterprise discounted cash flow method
Project a firm's cash flows

Calculate residual value
How to value a firm using multiples

How to value a firm using the enterprise discounted cash flow method
Project a firm's cash flows
Calculate residual value
How to value a firm using multiples

Syllabus

Week 1: Firm Valuation Framework

Week 2: Calculation of Free Cash Flows

Week 3: Financial Ratios and Projection of Free Cash Flows

Week 4: Residual Value and Valuation Using Multiples

Week 5: Putting it All Together: Valuation Case Study

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Taught by Daniel Wolfenzon, who is recognized for their work in Corporate Finance

Designed for learners with prior knowledge in Corporate Finance

Develops basic firm valuation skills, which are core for roles in finance

Leverages hands-on activities to enhance understanding of valuation concepts

Covers both theoretical frameworks and practical applications of firm valuation

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Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Free Cash Flow Analysis with these activities:

Review the basics of accounting and finance

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Refreshing your knowledge of accounting and finance will help you better understand the concepts of firm valuation.

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Review your notes or textbooks from previous accounting and finance courses
Take practice quizzes or tests to assess your understanding
Seek help from a tutor or mentor if needed

Read 'Valuation: Measuring and Managing the Value of Companies'

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This book provides a comprehensive overview of the techniques and concepts of firm valuation.

View Avaliação de empresas (Portuguese Edition) on Amazon

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Purchase or borrow the book
Read the book carefully and take notes
Complete the exercises and case studies at the end of each chapter
Discuss the book with your classmates or a study group

Form a study group with other students in the course

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Discussing course concepts with classmates can reinforce your understanding and help you identify areas where you need further clarification.

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Identify other students who are interested in forming a study group
Set up a regular meeting schedule
Discuss course concepts, review lecture notes, and work on problem sets together
Quiz each other to test your understanding

Four other activities

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Solve practice problems on firm valuation

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Solving practice problems will help you master the techniques of firm valuation.

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Find practice problems in textbooks, online courses, or practice websites
Attempt to solve the problems on your own
Check your answers and learn from your mistakes
Repeat until you are confident in your ability to solve firm valuation problems

Watch MIT's Video Lectures on Valuation

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Following the MIT video lectures will reinforce the course concepts and provide additional insights.

Browse courses on Firm Valuation

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Visit the MIT OpenCourseWare website
Search for the course 'Introduction to Finance'
Watch the video lectures on firm valuation
Take notes and review the key concepts

Create a financial model to value a company

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Building a financial model will give you hands-on experience in applying the concepts of firm valuation.

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Choose a company to value
Gather financial data on the company
Build a financial model in Excel
Value the company using the free cash flow method and the multiples method
Write a report summarizing your findings

Contribute to the Open Source Finance Project

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Contributing to an open source project will give you practical experience in applying the concepts of firm valuation.

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Find an open source finance project on GitHub or another platform
Identify an area of the project where you can contribute
Fork the project and make your changes
Create a pull request to merge your changes back into the main project
Collaborate with other contributors to refine your changes and get them merged

Career center

Learners who complete Free Cash Flow Analysis will develop knowledge and skills that may be useful to these careers:

Valuation Analyst

Valuation Analysts determine the value of assets, such as businesses, investments, and real estate. A strong understanding of firm valuation is essential for this role. This course will provide you with the skills needed to analyze companies and perform accurate valuations. With this course under your belt, you'll be well-prepared to enter the growing field of valuation.

See salaries and explore the career path for Valuation Analyst

Financial Analyst

Financial Analysts apply analytical skills to evaluate investments and make recommendations to clients. An understanding of firm valuation is essential for this role. This course will help you develop the skills needed to analyze companies and make informed investment decisions. With this course under your belt, you'll be well-prepared to enter the exciting field of financial analysis.

See salaries and explore the career path for Financial Analyst

Investment Banker

Investment Bankers provide advice to companies and governments on mergers and acquisitions, capital raising, and other financial transactions. A strong understanding of firm valuation is crucial for this role. This course will provide you with the knowledge and skills needed to succeed as an Investment Banker. You'll learn how to value companies, project cash flows, and calculate residual values.

See salaries and explore the career path for Investment Banker

Private Equity Analyst

Private Equity Analysts evaluate and invest in private companies. A deep understanding of firm valuation is essential for this role. This course will provide you with the skills needed to analyze companies and make sound investment decisions. With this course under your belt, you'll be well-prepared to enter the competitive field of private equity.

See salaries and explore the career path for Private Equity Analyst

Corporate Finance Analyst

Corporate Finance Analysts analyze and manage the financial risks and opportunities faced by companies. A strong understanding of firm valuation is essential for this role. This course will provide you with the skills needed to analyze companies and make informed financial decisions. With this course under your belt, you'll be well-prepared to enter the exciting field of corporate finance.

See salaries and explore the career path for Corporate Finance Analyst

Equity Research Analyst

Equity Research Analysts provide research and analysis of companies to investors and investment firms. A strong understanding of firm valuation is essential for this role. This course will provide you with the skills needed to analyze companies and make informed investment recommendations. With this course under your belt, you'll be well-prepared to enter the competitive field of equity research.

See salaries and explore the career path for Equity Research Analyst

Portfolio Manager

Portfolio Managers manage and invest funds on behalf of clients. A strong understanding of firm valuation is essential for this role. This course will provide you with the skills needed to analyze companies and make informed investment decisions. With this course under your belt, you'll be well-prepared to enter the challenging and rewarding field of portfolio management.

See salaries and explore the career path for Portfolio Manager

Financial Planner

Financial Planners help individuals and families reach their financial goals. A strong understanding of firm valuation is helpful for this role, as it can help you to make sound investment recommendations to your clients. This course will provide you with the skills needed to analyze companies and make informed investment decisions. With this course under your belt, you'll be well-prepared to enter the rewarding field of financial planning.

See salaries and explore the career path for Financial Planner

Credit Analyst

Credit Analysts assess the creditworthiness of individuals and companies. A strong understanding of firm valuation is helpful for this role, as it can help you to evaluate the financial health of potential borrowers. This course will provide you with the skills needed to analyze companies and make informed credit decisions.

See salaries and explore the career path for Credit Analyst

Risk Manager

Risk Managers identify and manage financial risks for companies. A strong understanding of firm valuation is helpful for this role, as it can help you to assess the potential financial risks faced by your company. This course will provide you with the skills needed to analyze companies and make informed risk management decisions.

See salaries and explore the career path for Risk Manager

Consultant

Consultants provide advice and solutions to businesses and organizations on a variety of topics, including financial management. A strong understanding of firm valuation is helpful for this role, as it can help you to provide sound financial advice to your clients. This course will provide you with the skills needed to analyze companies and make informed financial recommendations.

See salaries and explore the career path for Consultant

Auditor

Auditors examine the financial records of companies to ensure accuracy and compliance with regulations. A strong understanding of firm valuation is helpful for this role, as it can help you to assess the financial health of your clients. This course will provide you with the skills needed to analyze companies and make informed audit decisions.

See salaries and explore the career path for Auditor

Tax Accountant

Tax Accountants prepare and file tax returns for individuals and businesses. A strong understanding of firm valuation is helpful for this role, as it can help you to minimize your clients' tax liability. This course will provide you with the skills needed to analyze companies and make informed tax decisions.

See salaries and explore the career path for Tax Accountant

Forensic Accountant

Forensic Accountants investigate financial crimes and fraud. A strong understanding of firm valuation is helpful for this role, as it can help you to assess the financial losses caused by fraud. This course will provide you with the skills needed to analyze companies and make informed forensic accounting decisions.

See salaries and explore the career path for Forensic Accountant

Actuary

Actuaries assess and manage financial risks for insurance companies and other organizations. A strong understanding of firm valuation is helpful for this role, as it can help you to assess the financial risks faced by your clients. This course will provide you with the skills needed to analyze companies and make informed actuarial decisions.

See salaries and explore the career path for Actuary

Reading list

We've selected 12 books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in Free Cash Flow Analysis.

Narrative and Numbers

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As a highly regarded authority in valuation, Aswath Damodaran presents a comprehensive and accessible guide to the subject. Learners will benefit from the clear explanations of complex concepts, making it an excellent resource for expanding their knowledge and understanding.

Free Cash Flow Analysis

What's inside

Learning objectives

Syllabus

Good to know

Save this course

Activities

Career center

Reading list

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