Corporate valuation: Book "Valuation and Common Sense". Updated 2017. Free download

This free book (6^th edition, updated until September 2017) has 514 tables and 414 figures that are available (with all calculations) in Figures and Tables in Excel Format

It also has more than 1,000 readers comments of previous editions. I use the book with MBAs and Executives.
You may use (resend, distribute, copy, photocopy…) the book and any chapter as you wish.  I would very much appreciate any of your suggestions for improving the book.

Best regards,
Pablo Fernandez. Professor of Finance. IESEwebPage

IESE Business School

The 48 chapters may be downloaded for free at the following links: 

Valuation and Common Sense              Chapters		Downloadable at:
	Table of contents, acknowledgments, glossary	http://ssrn.com/abstract=2209089
1	Company valuation methods	http://ssrn.com/abstract=274973
2	Cash flow is a fact. Net income is just an opinion	http://ssrn.com/abstract=330540
3	Ten badly explained topics in most corporate finance books	http://ssrn.com/abstract=2044576
4	Cash flow valuation methods: perpetuities, constant growth and general case	http://ssrn.com/abstract=743229
5	Valuation using multiples: how do analysts reach their conclusions?	http://ssrn.com/abstract=274972
6	Valuing companies by cash flow discounting: ten methods and nine theories	http://ssrn.com/abstract=256987
7	Three residual income valuation methods and discounted cash flow valuation	http://ssrn.com/abstract=296945
8	WACC: definition, misconceptions and errors	http://ssrn.com/abstract=1620871
9	Cash flow discounting: fundamental relationships and unnecessary complications	http://ssrn.com/abstract=2117765
10	How to value a seasonal company discounting cash flows	http://ssrn.com/abstract=406220
11	Optimal capital structure: problems with the Harvard and Damodaran approaches	http://ssrn.com/abstract=270833
12	Equity premium: historical, expected, required and implied	http://ssrn.com/abstract=933070
13	The equity premium in 150 textbooks	http://ssrn.com/abstract=1473225
14	Market risk premium used in 82 countries in 2012: a survey with 7,192 answers	http://ssrn.com/abstract=2084213
15	Are calculated betas good for anything?	http://ssrn.com/abstract=504565
16	Beta = 1 does a better job than calculated betas	http://ssrn.com/abstract=1406923
17	Betas used by professors: a survey with 2,500 answers	http://ssrn.com/abstract=1407464
18	On the instability of betas: the case of Spain	http://ssrn.com/abstract=510146
19	Valuation of the shares after an expropriation: the case of ElectraBul	http://ssrn.com/abstract=2191044
20	A solution to Valuation of the shares after an expropriation: the case of ElectraBul	http://ssrn.com/abstract=2217604
21	Valuation of an expropriated company: the case of YPF and Repsol in Argentina	http://ssrn.com/abstract=2176728
22	1,959 valuations of the YPF shares expropriated to Repsol	http://ssrn.com/abstract=2226321
23	Internet valuations: the case of Terra-Lycos	http://ssrn.com/abstract=265608
24	Valuation of Internet-related companies	http://ssrn.com/abstract=265609
25	Valuation of brands and intellectual capital	http://ssrn.com/abstract=270688
26	Interest rates and company valuation	http://ssrn.com/abstract=2215926
27	Price to earnings ratio, value to book ratio and growth	http://ssrn.com/abstract=2212373
28	Dividends and share repurchases	http://ssrn.com/abstract=2215739
29	How inflation destroys value	http://ssrn.com/abstract=2215796
30	Valuing real options: frequently made errors	http://ssrn.com/abstract=274855
31	119 common errors in company valuations	http://ssrn.com/abstract=1025424
32	Shareholder value creation: a definition	http://ssrn.com/abstract=268129
33	Shareholder value creators in the S&P 500: 1991 – 2010	http://ssrn.com/abstract=1759353
34	EVA and ‘cash value added’ do NOT measure shareholder value creation	http://ssrn.com/abstract=270799
35	All-shareholder return, all-period returns and total index return	http://ssrn.com/abstract=2358444
36	339 questions on valuation and finance	http://ssrn.com/abstract=2357432
37	CAPM: an absurd model	http://ssrn.com/abstract=2505597
38	CAPM: the model and 307 comments about it	http://ssrn.com/abstract=2523870
39	Value of tax shields (VTS): 3 theories with “some” common sense	http://ssrn.com/abstract=2549005
40	Expected and Required returns: very different concepts	http://ssrn.com/abstract=2591319
41	RF and Market Risk Premium Used for 41 Countries in 2015: A Survey	http://ssrn.com/abstract=2598104
42	RF and MRP used by analysts in USA and Europe in 2015	http://ssrn.com/abstract=2684740
43	Meaning of the P&L and of the Balance Sheet: Madera Inc	http://ssrn.com/abstract=2671748
44	Net Income, cash flows, reduced balance sheet and WCR	http://ssrn.com/abstract=2675274
45	Meaning of Net Income and Shareholders’ Equity	http://ssrn.com/abstract=2676802
46	The Market Portfolio is NOT efficient	http://ssrn.com/abstract=2741083
47	Is it Ethical to Teach that Beta and CAPM Explain Something?	https://ssrn.com/abstract=2980847
48	Finance and Financial Economics: A debate	https://ssrn.com/abstract=2906887

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Why I don't trust crowd funded companies and products

With the recent announcement of another startup, camera drone maker Lily, biting the dust before it even got out of the gates or shipped a single unit, I'm even more convinced than ever that consumers should avoid funding products on crowd funding sites such as Kickstarter and Indiegogo and avoid pre-ordering products that have no history of successful manufacture or commercial beta testing.

Too many companies can create slick videos of "prototypes" which might not even exist, launch a campaign and then watch the money flow in from an unsuspecting public who want to believe and support the fantasy.  To be fair, I'm sure some of these companies truly believe they can launch a successful product if they only had additional investment, but I also believe that far too many people have learned that selling a fantasy or vaporware is an easy way to get peoples' money with little to no risk.

I watched the entire Amiigo fitness tracker and other debacles unfold before my eyes and am amazed that these companies can take in so much investment money and pre-order sales and then delay launch for months or years and then simply just pivot or walk away from the project and leave thousands of people without product or refunds.

Venture capitalists serve a critical role.  Founders of start-up companies must stand in front of these venture capitalists and sell their business ideas and then answer tough questions while the potential investors scrutinize every aspect of the product, capabilities, backgrounds of the key players, financing, timelines, technology, etc.  In short, venture capitalists fully vet a venture before they invest in it because they want to minimize their risk and have some reassurance that the company has a sound concept with the ability to execute and implement a solid plan.

Startups on crowd funding sites, however, only have to communicate one way and create slick materials to pull in pre-orders and "backers" from unsuspecting people who have no way to evaluate the credibility of the offer or the experience of the people behind the offer.  Backers have no way of authenticating marketing claims nor examining finances or business plans to better understand the risk.

If a business cannot attract funding from professional investors, then it probably is not worthy of being funded.

If a business cannot attract funding from professional investors, then it probably is not worthy of being funded.  If a company has to turn to crowd funding sites or take pre-orders before it has a realistic idea of whether it can actually manufacture and deliver product of sufficient quality and in sufficient quantities, then it is probably taking a much greater gamble with your money than you ever would.

Here are some quick tips:

1. Never order a product that has not emerged from beta testing and is not already in final manufacturing.

2. Don't fund or back companies with no history of previous successful product launches.

3. Wait until there are actual, real customer reviews of the product.  Believe me, early adopters and beta testers will quickly write reviews or post YouTube videos about their experience.  Wait until there are enough of these reviews to get a better understanding of which ones are real, which ones were written by shills, and which products are truly winning over real customers.

4.  Research the founders and principals of the company.  If they have no track record of success or look too young to have much real world experience, then the odds are they have no idea how to actually bring a product to market.

5.  Be wary of slick videos that depict products that look too good to be true.  Those products probably are too good to be true.

See also:
The 5 biggest crowdfunding failures of all time