Excel Valuation Model

[nickenumbers]

Does anyone have an Excel valuation model that you would be willing to share?  A model that you could plug a series of future cash flows for a company, and run a DCF.  Maybe add assets, subtract debt, etc.

 

I have a couple basic no frills ones that work, and I have access to a lot of excessively complicated business school ones.

 

If anyone has something that they use when they want to 10K view or get into the weeds on a company's financial statements, I would enjoy seeing your approach.

 

Perhaps the world will repay you with high future returns for your contribution to fellow CoBF members.  ;)

[rb]

If you want a simple DCF type stuff you can build a basic one in like 7 minutes.

 

I'm of the firm belief that models should be flexible because the world is complicated and models should reflect that. Something where u plug some numbers in and spits out an answer won't be that great.

 

Anyway, here's one that I've built when I was in grad school and I've used it on and off since then. It's a Bruce Greenwald type model. Would work better on asset heavy type companies. Have fun with it.

CSCO_-_Q3_2011_temp.xlsx

[gary17]

RB

i see you learned a lot about valuation in grad school

question for you

assuming ROIC > WACC , and  all else being equal, would you say a company with low ROIC and high growth is more valuable or a company with high ROIC but low growth?

 

Thanks

Gary

[rb]

RB

i see you learned a lot about valuation in grad school

question for you

assuming ROIC > WACC , and  all else being equal, would you say a company with low ROIC and high growth is more valuable or a company with high ROIC but low growth?

 

Thanks

Gary

Gary, honestly I didn't learn much about valuation in school that I didn't already know. It was fun though.

 

Anyway, there's no real answer to your question. As long as ROIC>WACC growth creates value. So you have Company A with a lower ROIC and high growth and Company B with high ROIC and low growth. If you assume ceteris paribus that both A and B have their ROIC>WACC then both crate value. Which one creates more value would depend on the relative differences between their ROICs and their growth rates.

[gary17]

I see. thanks

maybe I ask differently — which one is a better business to own long term? my initial thought is high ROiC means the business has a stronger competitive advantage ; so if given the choice , i’d own the one with higher ROIC. 

[SnarkyPuppy]

I see. thanks

maybe I ask differently — which one is a better business to own long term? my initial thought is high ROiC means the business has a stronger competitive advantage ; so if given the choice , i’d own the one with higher ROIC.

 

There's no one-size fits all way of looking at this.  In general, higher ROIC is better than lower ROIC (when ROIC>WACC).  But when analyzing a business, ROIC is simply one data point and even knowing ROIC alone from a quantitative perspective is insufficient.  Just as important is the sustainability of that ROIC - which requires qualitative assessments about the strength of the business unit economics, competitive advantage, management/customer/supplier incentives, and overall industry structure (e.g. product penetration rates). 

 

ROIC is definitely on average one of the more important data points to consider when analyzing a business.  I think more important though is to simply spend a lot of time analyzing businesses and learning how to identify key variables that drive value.  Every situation is different - and your ability to recognize and analyze the 2-3 key variables that will drive the value of the company can be a huge advantage.  And then buy at a cheap price. 

[nickenumbers]

If you want a simple DCF type stuff you can build a basic one in like 7 minutes.

 

I'm of the firm belief that models should be flexible because the world is complicated and models should reflect that. Something where u plug some numbers in and spits out an answer won't be that great.

 

Anyway, here's one that I've built when I was in grad school and I've used it on and off since then. It's a Bruce Greenwald type model. Would work better on asset heavy type companies. Have fun with it.

 

RB- Wow.  That thing is amazing!  Very well done, and I/we appreciate you sharing it.  I am going to dive into it.

 

I honestly find this CoBF group to be a huge value add to my thinking and my journey.  Of course no group is ever perfect, but what is?!  Generally like minded, smart, witty, rational, deep specialists and wide generalists [polymaths]. 

 

You CoBF folks are my TRIBE!  Thanks RB!

[rb]

You're welcome.