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LinkedIn Learning

Finance Foundations: Business Valuation

via LinkedIn Learning

Overview

Learn how to value a business using different valuation methods, such as multiples, earnings ratios, and discounted cash-flow analysis.

Do you know the value of your business? Business valuation is critical when selling a small business, bringing on a partner, seeking additional debt or equity financing, establishing the share valuation in an initial public offering (IPO), or buying another company. In this course, accounting professors Jim and Kay Stice provide an introduction to the most important business valuation methods. They proceed from the valuation of individual assets and liabilities to the valuation of entire businesses. The course includes practice with simple valuation models, such as the use of multiples and price-to-earnings ratios, as well as the more complicated "discounted cash flow" valuation model. The final chapters include a fun and practical examination of the value of one very real business—McDonald's—and some parting words of advice.

Make sure to check out the Stice brothers' other accounting and finance courses to understand the other economic factors that impact your business.

Syllabus

Introduction
  • Understanding and using business valuations
1. Calculating Business Valuations
  • Why business valuation matters
  • Basic appraisal concepts
  • Market approach to business valuation
  • Cost approach to business valuation
  • Income approach and the time value of money
2. Price Multiples
  • Microsoft IPO and the valuation process
  • Valuation of a home
  • Earning multiples
  • Equity multiples
  • Sales multiples
  • WhatsApp acquisition and using other multiples
  • Use price-to-sales ratio to value foreign companies
3. Discounted Cash Flow Analysis
  • Use discounted cash flow on a car purchase
  • Cash flows, timing, and risk
  • Risk and interest rates
  • Cash flow forecasts
  • Use discounted cash flow analysis to determine a company's value
4. Case Study: Valuing McDonald's
  • McDonald's history and facts
  • McDonald's numbers
  • Dividend-based valuation
  • Earnings and equity multiples
  • Discounted cash flow valuation
  • Compare the valuation models
Conclusion
  • Final advice on using business valuation techniques

Taught by

Jim Stice and Kay Stice

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