Valuation of Companies (N1591)
Valuation of Companies and Cash Flow Generating Assets
Module N1591
Module details for 2022/23.
15 credits
FHEQ Level 6
Module Outline
This module explores methods to value companies and cash flow generating assets. The module starts by analysing the fundamental drivers of value and then addresses three main valuation approaches:
• Intrinsic: Discounted Cash Flows (DCF);
• Relative: Multiples; and
• Contingent: Decision Tree Analysis and Real Options.
Particular focus is on the most common approach, DCF, discussing in detail how to estimate the necessary inputs (cash flows, discount rates and growth). We will discuss the importance of selecting the correct data to get accurate valuations, and emphasise difficulties encountered during the data collection process.
These methods are applicable to all kinds of companies and more generally to any cash flow generating asset. We will start by analysing large public companies because of certain desirable corporate characteristics like the availability of information. We will then examine situations where companies lack some of these characteristics, like private companies where the availability of information is typically low.
The relative and contingent approaches are explored, and their assumptions and inputs are discussed. In the contingent approach, the value of flexibility is highlighted.
This module is very practically orientated, and case studies based on real company accounts will be used to highlight and analyse the challenges encountered when performing valuations. In particular, an Excel based valuation model of an existing corporate will be built during the module.
The learning objectives of the module are implementable in corporate situations and professional roles, which require a valuation, including private equity, IPO and determining whether financial markets potentially under/overvalue companies.
Module learning outcomes
Critically evaluate the fundamental drivers of value and the main valuation approaches.
Identify the inputs required by the various approaches, and be able to estimate them.
Distinguish among various types of situations/firms, and be able to select the most appropriate input data and valuation approach.
Systematically understand the key aspects of debt finance
| Type | Timing | Weighting |
|---|---|---|
| Coursework | 25.00% | |
| Coursework components. Weighted as shown below. | ||
| Computer Based Exam | T1 Week 8 (1 hour) | 100.00% |
| Unseen Examination | Semester 1 Assessment | 75.00% |
Timing
Submission deadlines may vary for different types of assignment/groups of students.
Weighting
Coursework components (if listed) total 100% of the overall coursework weighting value.
| Term | Method | Duration | Week pattern |
|---|---|---|---|
| Autumn Semester | Lecture | 2 hours | 11111011111 |
| Autumn Semester | Seminar | 1 hour | 11111011111 |
How to read the week pattern
The numbers indicate the weeks of the term and how many events take place each week.
Dr Malgorzata Sulimierska
Assess convenor, Convenor
/profiles/155508
Dr Siyang Tian
Convenor, Assess convenor
/profiles/608508
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