About the Authors ix
Introduction xi
Part One Questions
1 WhyValueValue? 3
2 Fundamental Principles of Value Creation 5
3 Conservation of Value and the Role of Risk 9
4 The Alchemy of Stock Market Performance 11
5 The Stock Market Is Smarter Than You Think 15
6 Return on Invested Capital 21
7 Growth 25
8 Frameworks for Valuation 29
9 Reorganizing the Financial Statements 33
10 Analyzing Performance 37
11 Forecasting Performance 41
12 Estimating Continuing Value 45
13 Estimating the Cost of Capital 49
14 Moving from Enterprise Value to Value per Share 53
15 Analyzing the Results 57
16 Using Multiples 61
17 Valuing by Parts 65
18 Taxes 69
19 Nonoperating Items, Provisions, and Reserves 73
20 Leases and Retirement Obligations 77
21 Alternative Measures of Return on Capital 81
22 Inflation 85
23 Cross-Border Valuation 89
24 Case Study: Heineken 93
25 Corporate Portfolio Strategy 99
26 Performance Management 103
27 Mergers and Acquisitions 107
28 Divestitures 113
29 Capital Structure, Dividends, and Share Repurchases 117
30 Investor Communications 121
31 Emerging Markets 125
32 Valuing High-Growth Companies 127
33 Cyclical Companies 129
34 Banks 133
35 Flexibility 137
Part Two Solutions
1 Why Value Value? 143
2 Fundamental Principles of Value Creation 145
3 Conservation of Value and the Role of Risk 147
4 The Alchemy of Stock Market Performance 149
5 The Stock Market Is Smarter Than You Think 151
6 Return on Invested Capital 153
7 Growth 155
8 Frameworks for Valuation 157
9 Reorganizing the Financial Statements 159
10 Analyzing Performance 161
11 Forecasting Performance 163
12 Estimating Continuing Value 167
13 Estimating the Cost of Capital 169
14 Moving from Enterprise Value to Value per Share 171
15 Analyzing the Results 173
16 Using Multiples 175
17 Valuing by Parts 177
18 Taxes 179
19 Nonoperating Items, Provisions, and Reserves 181
20 Leases and Retirement Obligations 185
21 Alternative Measures of Return on Capital 189
22 Inflation 191
23 Cross-Border Valuation 195
24 Case Study: Heineken 197
25 Corporate Portfolio Strategy 203
26 Performance Management 205
27 Mergers and Acquisitions 207
28 Divestitures 209
29 Capital Structure, Dividends, and Share Repurchases 211
30 Investor Communications 215
31 Emerging Markets 219
32 Valuing High-Growth Companies 221
33 Cyclical Companies 223
34 Banks 225
35 Flexibility 229