SubjectsSubjects(version: 945)
Course, academic year 2023/2024
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Company Valuation - JEM132
Title: Company Valuation
Guaranteed by: Institute of Economic Studies (23-IES)
Faculty: Faculty of Social Sciences
Actual: from 2019
Semester: winter
E-Credits: 6
Examination process: winter s.:
Hours per week, examination: winter s.:2/2, Ex [HT]
Capacity: 185 / 185 (185)
Min. number of students: unlimited
4EU+: no
Virtual mobility / capacity: no
State of the course: taught
Language: English
Teaching methods: full-time
Teaching methods: full-time
Additional information:
Note: course can be enrolled in outside the study plan
enabled for web enrollment
priority enrollment if the course is part of the study plan
Guarantor: doc. Bc. Jiří Novák, M.Sc., Ph.D.
Teacher(s): Mgr. Alina Cazachevici
Mgr. Pavel Neumann
doc. Bc. Jiří Novák, M.Sc., Ph.D.
Attila Sarkany
Fan Yang
Class: Courses for incoming students
Annotation -
Last update: doc. Bc. Jiří Novák, M.Sc., Ph.D. (27.09.2022)

The course introduces students to financial analysis and company valuation. The exposition starts with the discussion of the conceptual points of departure that constitute the basis for rigorous financial analysis and valuation. Subsequently, students are guided through the process of the construction of the discounted cash flow valuation model. Practical considerations are discussed and students learn how to apply the conceptual framework in real life setting. Finally, students put their knowledge into practice as they are asked to use their model to value an existing company and interpret the results.

The course is primarily intended for four-year and fifth-year students. Bachelor’s level students are welcome to take the course after an agreement with the instructor. The course is suitable for students who aim to take the CFA Exams or to participate in the CFA Research Challenge. We recommend (but do not strictly require) students to take the following courses before they take Company Valuation (JEM132): Financial Accounting (JEB044), Financial Management (JEB045), Asset Pricing (JEM092).

Literature -
Last update: doc. Bc. Jiří Novák, M.Sc., Ph.D. (31.08.2023)

Koller, T., Goedhart, M., Wessels D. (McKinsey) - Valuation: Measuring and Managing the Value of Companies (John Wiley & Sons Inc., Hoboken, N.J.).

Penman, S. H. - Financial Statement Analysis and Security Valuation (McGraw-Hill, London).
Damodaran, A. - The dark side of valuation, Prentice Hall.
Lundholm, R., T. O'Keefe and G. A. Feltham (2001), "Reconciling Value Estimates from the Discounted Cash Flow Model and the Residual Income Model", Contemporary Accounting Research, Vol. 18, No. 2, pp. 311.

Requirements to the exam -
Last update: doc. Bc. Jiří Novák, M.Sc., Ph.D. (31.08.2023)

Students are invited to submit responses to lecture preludes and participate in in-class discussions. Students are required to take the final written in-class exam. The final grade is determined based on the result of the final exam. Students may be upgraded (but not downgraded) based on the quality of their responses to lecture preludes and their contribution to in-class discussions. The grading scale is as follows:

  • 91 pts - A – excellent 
  • 81 pts - B – very good
  • 71 pts - C – good
  • 61 pts - D – fair
  • 51 pts - E – satisfactory
  • less - F – fail
Syllabus -
Last update: doc. Bc. Jiří Novák, M.Sc., Ph.D. (31.08.2023)

1) Introduction - overview of the course, discussion of the literature, specification of the requirements, company valuation framework
2) Valuation Models - primary exposition of the kev valuation models: comparable multiples, discounted dividend model, discounted cash flow model, residual income model
3) Accounting Reorganization - key accounting relationships, reclassification of accoutning figures, invested capital, net operating profit less adjusted taxes, free cash flow
4) Financial Analysis - construction of financial ratios, return on equity, return on invested capital, financial leverage & spread, asset turnover, operating profit margin
5) Cost of Debt - fundamental differences in the cost of capital, effective interest rate, component approach, yield to maturity (YTM)
6) Cost of Equity - estimating CAPM, determination of equity market risk premium, estimating beta, 3-factor model
7) Weighted Average Cost of Capital (WACC) - financial structure, target vs. historical weights
8) Comparable Multiples - book-to-market ratio, earnings-to-price ratio, ebita-to-enterprise value ratio
9) Free Cash Flow (FCF) - construction, forecasting operating profitability, tax rates, changes in invested capital
10) Qualitative Analysis - macroeconomic analysis, Porter's analysis, SWOT analysis
11) Forecasting - value drivers, forecasting of growth, forecasting of profitability
12) Horizon - determining horizon growth and profitability, continuing value
13) Value Estimate - discounting, determining per share value, sensitivity analysis, buy-hold-sell recommendation

Files (CVL23, JEM132, IES FSV UK, Company Valuation) | Google Disk

Valuation 2.10 - Class CVL23 - Heineken (JN, 2023-08-31) | Google Sheets Valuation Model

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