The author is a Finance Professor at NYU Stern Business School. Despite academic background, the book does not seems less like a textbook but more as a practitioner’s guide. And so much so that it is the most easy to read finance book that I have ever come across!
The book may not be as elaborate as the finance textbooks but is comprehensive enough to convey the subject matter along with the fundamentals as well as nuances. However, do not be swayed by the candle sticks in the blog image, as this book is not one of those quick trade guides with candle stick. Rather it focuses on the fundamental concepts of corporate finance and their application to valuation.
Hence, the reader should have a basic understanding of Corporate Finance. If you’re a veteran financial analyst or CFA, you can browse through the book to imbibe the nuances rather than the methods. But for an enthusiast, who plans to use this learning to make wiser stock picks, one can make notes for later reference. And finally for curious MBA students, this is quick CF revision or placement prep for IB – Investment Banking, PE – Private Equity, or VC – Venture Capital.
The book begins with explaining the fundamentals of firm valuation including both the methods: intrinsic and relative. At every stage the author not only elaborates the concepts and but also conveys the nuances. However, as the application of the valuation methods has different set of nuances and challenges across different types of companies, it then proceeds to specifics sections for each type: Early Stage, Growing, Mature, Declining, Cyclic and Commodity companies.
The sections are structured in a similar fashion, covering application of both intrinsic and relative valuation. The challenges or limitations and solutions of each approach are elaborated along with the key value drivers and finally summarised as value plays. And each of the sections include an example of a company, making it easy to follow. Furthermore, the methods are summarised in tabular form, which is handy in practice, making them an important takeaway.
One more type of company that I felt should have been included are real estate and utility companies, having disproportionately high fixed assets and limited upsides resulting in equity that has risk and return features similar to debt. However, given the coverage, this book is an excellent for traders, investors, venture capitalists, financial advisors, hobby investors, and of course MBAs.
Feature Image Photo by Maxim Hopman on Unsplash
Savvy Munshi 