Traditional valuation methods often have limitations, particularly when it comes to assessing financially distressed companies. Approaches like Discounted Cash Flows heavily rely on assumptions such as positive Free Cash Flows, which may not be applicable to companies that are facing financial difficulties, or having negative cash flows as a result of substantial capital expenditures. The residual income model offers a fresh perspective on valuation, enabling the assessment of such companies using a different approach. This short course provides comprehensive instruction on valuing a company using the residual income model.

Pre-requisites:

• Solid understanding of financial statements
• Familiarity with basic equity valuation principles
• Proficiency in the concept of time value of money

Course Level: Expert

Key Concepts Covered:

• Residual Income: Understanding the concept and its significance in valuing financially distressed companies and start-ups
• Persistence Factor: Exploring the persistence of residual income over time and its impact on valuation
• Book Value of Equity: Analysing the role of book value of equity in the residual income model and its implications for valuation

Course Components:

• On-demand course videos: Comprehensive video lectures that guide you through the concepts and techniques of the residual income model
• Downloadable course slides: Presentation slides to enhance your understanding and serve as a reference for future use
• Practice questions: Opportunities to reinforce your learning and apply the residual income model in practical scenarios
• Case studies: Real-world examples and case studies to practice valuing financially distressed companies and start-ups using the residual income model
• Final quiz: Assessing your comprehension of the course material and evaluating your ability to apply the concepts learned
• Course certificate: A certificate of completion to validate your proficiency in valuing companies using the residual income model

Note: This course assumes a solid foundation in financial statement analysis, basic equity valuation, and the time value of money. It is tailored for individuals seeking expertise in valuing financially distressed companies and start-ups using the residual income model, offering an alternative approach to traditional valuation methods.