Fernandez offers eighth ‘common sense’ update for business valuation

BVWire–UKIssue #52-1
July 11, 2023

The 8th edition of Pablo Fernandez’s Valuation and Common Sense is now available via SSRN. The free set of 24 chapters takes on some of the most common problems with WACC, CAPM, the use of multiples, and the risk-free rate in the UK (particularly now given inflation and GDP fluctuations) and elsewhere.

Fernandez, the prolific professor of finance at IESE in Madrid, welcomes the redistribution of his data and research.  

Table of contents, acknowledgments, glossary
1 “Company Valuation Methods”
2 “Cash Flow Discounting: Fundamental Relationships and Unnecessary Complications”
3 “Cash Flow Valuation Methods: Perpetuities, Constant Growth and General Case”
4 “Valuing Companies by Cash Flow Discounting: 10 Methods and Nine Theories”
5 “WACC: Definition, Misconceptions and Errors”
6 “Valuation Using Multiples: Dispersion. Useful to Compare and to Negotiate”
7 “PER (Price to Earnings Ratio), PtoB (Value to Book Ratio) and g (Growth)”
8 “How to Value a Seasonal Company Discounting Cash Flows”
9 “Equity Premium: Historical, Expected, Required and Implied”
10 “CAPM: An Absurd Model”
11 “CAPM: The Model and 307 Comments About It”
12 “The Equity Premium in 150 Textbooks”
13 “Market Risk Premium and Risk-Free Rate Used in 80 Countries in 2023: A Survey”
14 “Are Calculated Betas Good for Anything?”
15 “Beta = 1 Does a Better Job Than Calculated Betas”
16 “Valuing Real Options: Frequently Made Errors”
17 “Value of Tax Shields (VTS): Three Theories With ‘Some’ Common Sense”
18 “Internet Valuations: The Case of Terra-Lycos”
19 “Valuation of Internet-Related Companies”
20 “Valuation of Brands and Intellectual Capital”
21 “Interest Rates and Company Valuation”
22 “Dividends and Share Repurchases”
23 “How Inflation Destroys Value: Taxes”
24 “119 Common Errors in Company Valuations”
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