Valuation

Valuation : Measuring and Managing the Value of Companies, University Edition

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McKinsey & Company's #1 best-selling guide to corporate valuation - the fully updated seventh edition Valuation, University Edition is filled with the expert guidance from McKinsey & Company that students and professors have come to rely on over nearly three decades. Now in its seventh edition, this acclaimed volume continues to help financial professionals around the world gain a deep understanding of valuation and help their companies create, manage, and maximize economic value for their shareholders. This latest edition has been carefully revised and updated throughout, and includes new insights on topics such as digital, ESG (environmental, social and governance), and long-term investing, as well as fresh case studies.
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Product details

  • Paperback | 960 pages
  • 180 x 251 x 32mm | 1,452g
  • New York, United States
  • English
  • 7th Edition
  • 1119611865
  • 9781119611868
  • 24,451

Back cover copy

FOR THIRTY YEARS McKINSEY HAS BEEN A TRUSTED GUIDE TO TEACHING CORPORATE VALUATION

Valuation, University Edition, Seventh Edition contains the expert guidance from McKinsey & Company that students and professors have come to rely on. New to the fully revised and updated Seventh Edition New case studies that clearly illustrate both the economics of value creation and the process of measuring value Clarifies the distinction between creating shareholder value and maximizing short-term profits Explores in greater depth the factors that drive long-term value creation

For thirty years Valuation has remained true to its basic principles and continues to offer a step-by-step approach to valuation, including: Analyzing historical performance Forecasting performance Estimating the cost of capital with practical tips Interpreting the results of a valuation in light of a company's situation Linking a company's valuation multiples to the core drivers of its performance

The University Edition contains End-of-Chapter Review Questions that help students master key concepts from each chapter.

Wiley also offers an Online Instructor's Manual with a full suite of learning resources for professors and students.

McKINSEY & COMPANY is a global management-consulting firm that serves across a wide range of industries and functions.
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Table of contents

About the Authors ix


Preface xi


Acknowledgments xv


Part One Foundations of Value


1 Why Value Value? 3


Review Questions 16


2 Finance in a Nutshell 17


Review Questions 26


3 Fundamental Principles of Value Creation 27


Review Questions 54


4 Risk and the Cost of Capital 55


Review Questions 68


5 The Alchemy of Stock Market Performance 69


Review Questions 83


6 Valuation of ESG and Digital Initiatives 85


Review Questions 100


7 The Stock Market is Smarter Than You Think 101


Review Questions 129


8 Return on Invested Capital 131


Review Questions 158


9 Growth 159


Review Questions 178


Part Two Core Valuation Techniques


10 Frameworks for Valuation 181


Review Questions 209


11 Reorganizing the Financial Statements 211


Review Questions 245


12 Analyzing Performance 247


Review Questions 267


13 Forecasting Performance 269


Review Questions 295


14 Estimating Continuing Value 299


Review Questions 318


15 Estimating the Cost of Capital 321


Review Questions 350


16 Moving from Enterprise Value to Value per Share 353


Review Questions 374


17 Analyzing the Results 377


Review Questions 387


18 Using Multiples 389


Review Questions 412


19 Valuation by Parts 415


Review Questions 434


Part Three Advanced Valuation Techniques


20 Taxes 439


Review Questions 453


21 Nonoperating Items, Provisions, and Reserves 455


Review Questions 471


22 Leases 473


Review Questions 486


23 Retirement Obligations 489


Review Questions 498


24 Measuring Performance in Capital-Light Businesses 499


Review Questions 514


25 Alternative Ways to Measure Return on Capital 515


Review Questions 524


26 Inflation 525


Review Questions 539


27 Cross-Border Valuation 541


Review Questions 559


Part Four Managing for Value


28 Corporate Portfolio Strategy 563


Review Questions 583


29 Strategic Management: Analytics 585


Review Questions 608


30 Strategic Management: Mindsets and Behaviors 609


Review Questions 623


31 Mergers and Acquisitions 625


Review Questions 653


32 Divestitures 655


Review Questions 674


33 Capital Structure, Dividends, and Share Repurchases 675


Review Questions 708


34 Investor Communications 709


Review Questions 731


Part Five Special Situations


35 Emerging Markets 735


Review Questions 752


36 High-Growth Companies 753


Review Questions 768


37 Cyclical Companies 769


Review Questions 777


38 Banks 779


Review Questions 805


39 Flexibility 807


Review Questions 841


Appendix A Discounted Economic Profit Equals Discounted Free Cash Flow 843


Appendix B Derivation of Free Cash Flow, Weighted Average Cost of Capital, and Adjusted Present Value 849


Appendix C Levering and Unlevering the Cost of Equity 855


Appendix D Leverage and the Price-to-Earnings Multiple 863


Appendix E Other Capital Structure Issues 867


Appendix F Technical Issues in Estimating the Market Risk Premium 873


Appendix G Global, International, and Local CAPM 877


Appendix H A Valuation of Costco Wholesale 885


Appendix I Two-Stage Formula for Continuing Value 909


Index 911
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About McKinsey & Company Inc.

TIM KOLLER is a partner in McKinsey's Stamford, Connecticut office, where he leads a global team of corporate-finance expert consultants.

MARC GOEDHART is a senior expert in McKinsey's Amsterdam office and an endowed professor of corporate valuation at Rotterdam School of Management, Erasmus University (RSM).

DAVID WESSELS is an adjunct professor of finance at the Wharton School of the University of Pennsylvania.
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