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Course · 15 lessons
Intrinsic Value & DCF
Value a business from first principles — cash flows, discount rates, and a margin of safety.
Intrinsic Value
What a company is actually worth based on its fundamentals, independent of its current market price.
Free Cash Flow
The cash left over after a company pays to maintain and grow its asset base — money it can return to investors or reinvest.
Owner Earnings
Warren Buffett's measure of the real cash an owner can take out of a business each year.
Net Operating Profit After Tax
A company's core operating profit after taxes, before any effect of how it is financed.
Invested Capital
The total money put into a business by lenders and shareholders that is funding its operations.
Free Cash Flow to the Firm
The cash a business generates for all its investors — both debt and equity — after reinvestment.
Free Cash Flow to Equity
The cash left for shareholders after the business reinvests and meets its debt obligations.
Cost of Equity
The annual return shareholders expect for the risk of owning a company's stock.
Capital Asset Pricing Model
A model that estimates required return from one factor: how much a stock moves with the overall market.
Weighted Average Cost of Capital
The blended return a company must earn to satisfy all its investors — both lenders and shareholders.
Discounted Cash Flow
Valuing a business by projecting its future cash flows and discounting them back to today's dollars.
Terminal Value
The estimated value of all a company's cash flows beyond the explicit forecast period, in one figure.
DCF Valuation Basics
Estimate a company's worth today by projecting its future cash and discounting it back to present value.
Dividend Discount Model
Valuing a stock as the present value of all the dividends it is expected to pay.
Margin of Safety
The discount between a stock's price and your estimate of its intrinsic value — a buffer against being wrong.