Aswath Damodaran

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In this spreadsheet, I compute the cost of capital and firm value, at different debt ratios, with the intent of finding the optimal mix. It reflects the changes and constraints on debt in the 2017 tax reform act.Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/capstru2018.xlsx
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In this session, I use the findings from project analyses to review the entire class, from corporate governance to valuation. I close by going back to the big picture of corporate finance, presented in the first session, and check on whether the objectives of the class have been accomplished.Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/ProjSumm22.pdfSummary of project findings: https://www.stern.nyu.edu/~adamodar/pc/cfanalysis/cfspr22.xlsx
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In this session, I first look at the profitability of publicly traded companies around the world, using a range of profit margins. I thin look at the returns that companies generate on their existing investments, using accounting returns, and compare them to the cost of capital with a singular question. Do companies generally earn more, about equal to or less than their cost of capital? I find that not only do 60% of all companies earn less than their cost of capital, the problem cuts across companies in different geographies, size classes and growth classes. Put simply, growth in most companies is a value destroyer.Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/dataupdate7for2018.pdfBlog Post: https://aswathdamodaran.blogspot.in/2018/01/january-2016-data-update-7-growth-and.htmlSpreadsheet: http://www.stern.nyu.edu/~adamodar/pc/returncalculator.xlsDatasets:1. Profit Margins, by sector (US): http://www.stern.nyu.edu/~adamodar/pc/datasets/margin.xls2. Profit Margins, by sector (Global): http://www.stern.nyu.edu/~adamodar/pc/datasets/marginGlobal.xls3. Excess Returns, by sector (US): http://www.stern.nyu.edu/~adamodar/pc/datasets/EVA.xls4. Excess Returns, by sector (Global): http://www.stern.nyu.edu/~adamodar/pc/datasets/EVAGlobal.xlsPaperReturn on Capital, Return on Invested Capital and ROE: Measures and Implications (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105499)
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In this, the final session of the class, we started with using Dante’s Inferno to illustrate layers of valuation hell, with different valuation sins putting you deeper and deeper in that space. We then used your findings on the project to review the basics of intrinsic valuation, pricing and real options. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valclosespr22.pdf Class project summary: http://www.stern.nyu.edu/~adamodar/pc/eqrec/spr22.xlsx
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