The standard Discounted Cash Flow (DCF) method is the typical tool used to value firms, but one drawback its inability to handle changing debt to equity levels. As we know, higher debt offers a higher tax shield, which in turn increases both firm value and equity value. To explicitly account
Finance 101
Introduction to Capital Structure
Firms can choose to finance themselves with a number of securities: shares, bonds, preferred shares, convertible bonds, etc. These securities can be classified into two broad categories, debt and equity, and each comes with its own cost. Capital structure describes the way a firm finances itself. Data from Statistics Canada, 2009 Capital
Value Capture Model
Porter's five forces, founded in the 1980's, is the classical framework used to understand and analyze competitive forces in an industry. In the 1990's, a new framework was formed, the Value Capture Model. The Value Capture Model extends on previous frameworks in two ways. One, it formally describes competition as a
Understanding Porter’s Five Forces
Porter's five forces is the most famous concept in strategy, and is a part of every business undergrad/MBA curriculum. The concept is a succinct yet brilliant way of describing the competitive forces in an industry. For banking, it is an immensely useful framework for industry analysis, a key part of
Modern Portfolio Theory and the Capital Allocation Line
M&A Deal Case Study
M&A Transaction Case Studies are commonly seen in case competitions, and often in actual investment banking work. Every time a pertinent transaction in the value range that is relevant to the investment banking group happens, the analyst will prepare a case study for distribution to the broader group. They are
Introduction to Enterprise Value and Valuation
Option Contracts and Put Call Parity
Fama French and Multi Factor Models
Capital Budgeting Methods
Capital budgeting is a tool for decision making at the firm level. As a manager, you will be constantly approached with projects from different departments. To make the best decisions for your shareholders, you need a tool that can compare projects of different size, duration, and nature. Capital budgeting provides