BusinessEntrepreneurshipEducation

Aswath Damodaran

I teach corporate finance, valuation and investment philosophies at the Stern School of Business at New York University. I have online versions of all three courses here, as well as other finance-related videos.
1. The Corporate Finance Online playlist has an introductory video and 36 sessions that cover all of corporate finance (at least as I see it).
2. The Valuation playlist has 25 sessions that cover valuation approaches, issues and questions.
3. The Investment Philosophies playlist has sessions that cover different investment philosophies.
4. The Accounting and Statistics playlists reflect my quirky and unorthodox introductions to two disciplines that are critical to my valuation and corporate finance classes.
5. The Blog Posts playlist has sessions that go wit my blog posts and reflect my standing as a dabbler, rather than expert, in all things finance-related.
If you need the supporting material for any of the classes, check the links below.

Links:
Corporate finance materials: http://www.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html
Valuation materials: http://www.stern.nyu.edu/~adamodar/New_Home_Page/equity.html
Investment Philosophies: http://www.stern.nyu.edu/~adamodar/New_Home_Page/invphil.htm
Books: http://www.stern.nyu.edu/~adamodar/New_Home_Page/public.htm
My website: http://www.damodaran.com

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October 5 · 1 hr 30 min
Session 19: Pricing Closure
In this class, we closed the book on relative valuation by looking at how to price young companies, using forward multiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentionedmultiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned http://www.bizstats.com/reports/valuation-rule-thumb.php If you are interested in seeing the market regressions, across multiples and different regional groupings, you can find them here: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/MReg23.html Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relval3atest.pdf.pdf Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session19slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Ctest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Csoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 5 · 20 min
Faith, Fear and Feedback: Ready for the Valeant Test?
In May 2016, I bought Valeant at $27, contending that it was worth $44. The stock dropped to $15 on November 9, 2016, leading me to a decision of whether to abandon the stock, hold on or add to my position. In this webcast, I reason my way to an answer and I will let you decide how much I am letting hope override common sense. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ValeantNov16.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/faith-feedback-and-fear-returning-to.html Learn more about your ad choices. Visit megaphone.fm/adchoices
October 5 · 1 hr 25 min
Session 21: Closure on Pricing
In today's class, we closed the book on relative valuation by looking at how to price young companies, using forward multiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentionedmultiples, and how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned http://www.bizstats.com/reports/valuation-rule-thumb.php If you are interested in seeing the market regressions, across multiples and different regional groupings, you can find them here: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/MReg23.html Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/relval3atest.pdf Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr23/session21slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Atest.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 5 · 1 hr 41 min
Session 20: Following up on optimizing debt mix
We started this class with the adjusted present value approach, where we begin with the unlevered firm value, and then add the tax benefits of debt and net out expected bankruptcy costs. We then looked at peer group analysis, where companies decide how much to borrow by looking at what other companies in the sector do. You can check out the debt ratios for other companies in your sector by going to my website: US industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfund.xls Global industry averages: http://www.stern.nyu.edu/~adamodar/pc/datasets/dbtfundGlobal.xls Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr23/session20slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20test.pdf Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session20soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 4 · 30 min
All in the family: The Ups and Downs of Family Group Companies
In October 2016, the board of directors of Tata Sons, the controlling entity for India's best known and perhaps most highly regarded family group, fired Cyrus Mistry, its chairman, in a shocking break from Tata group decorum. In this webcast, I look at that incident through the lens of family group companies, evaluating the trade off that has allowed them to prosper in Asia and Latin America, and why globalization and more open capital markets may threaten their prosperity. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/TataGroup.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/the-4c-tradeoff-promise-and-peril-of.html Learn more about your ad choices. Visit megaphone.fm/adchoices
October 4 · 1 hr 29 min
Session 20: Asset-based valuation and Intro to Private Company Valuation
In this session, we looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795 We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/assetvaluation.pdf Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session20slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20Atest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session20Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 4 · 1 hr 34 min
Session 19: Closing the books on Pricing and Asset-based valuation
In this class, we closed the book on relative valuation by looking at how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about. It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned http://www.bizstats.com/reports/valuation-rule-thumb.php And the site below has valuation spreadsheets as well as a valuation blog. http://www.valuecruncher.com/ We then moved on to asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation, and we will continue with this discussion the next session. Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relva;3atest.pdf Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession19.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Btest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session19Bsoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 4 · 1 hr 24 min
Session 22: Sum of the parts Valuation and first steps on Valuing Privately owned businesses
In this session, we looked at asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1609795 We then started our discussion of the valuation of private companies by noting how the lack of a market price for a business can affect your valuation in implicit and explicit ways, and then arguing that the value you attach to a private business can depend on why/for whom you are doing the valuation. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/assetvaluation.pdf Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr23/session22slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Btest.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Bsoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 3 · 1 hr 34 min
Session 18: Relative Valuation - Analysis and Application
In this session, we extended the discussion of the analysis of multiples by looking at PEG ratios, EV multiples and book value multiples. Each multiple, we argued, has a driver and companion variable.We then moved on to application and how best to find comparable firms and control for differences. Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/relva;2atest.pdf Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession18.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Atest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session18Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 3 · 1 hr 38 min
Session 21: Debt Design (Continued)
In this class, we looked at the design principles for debt. We started by completing a five step process for designing the perfect debt before looking at both intuitive and quantitative ways of debt design. In particular, we looked at a macro economic regression of firm value/operating income against interest rates, GDP, inflation and exchange rates. Keeping in mind the objective of matching debt to assets, think about the typical investments that your firm makes and try to design the right debt for the project. If your firm has multiple businesses, design the right kind of debt for each business. In making these judgments, you should try to think about - whether you would use short term or long term debt - what currency your debt should be in - whether the debt should be fixed or floating rate debt - whether you should use straight or convertible debt - what special features you would add to your debt to insulate the company from default Your objective is to get the tax advantages without exposing yourself to default risk. Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr23/session21slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21test.pdf Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session21soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 3 · 31 min
The Election Surprise: The Trump Election's Market Effect
On November 8, 2016, US voters delivered a surprise to pollsters, experts and markets by electing Donald Trump to be the 45th president of the United States. In this session, I focus on the investment and financial implications of a Donald Trump presidency and the lessons that we can learn from the US election. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/TrumpElection.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/the-trump-effect-on-markets-financial.html Learn more about your ad choices. Visit megaphone.fm/adchoices
October 3 · 1 hr 39 min
Session 21: Valuing Private Companies
In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvtcotest.pdf Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session21slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Ftest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session21Fsoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 2 · 59 min
Session 17: Analyzing Multiples -- Part 1
In this shortened session after the quiz in the first 30 minutes (edited out),, we continued with our discussion of multiples by looking at an analytical device that can be used to find the drivers of multiples. With equity multiples, you go back to a simple equity DCF model (a DDM or FCFE stable growth model) and with some algebra make the equation an intrinsic one for a multiple. With enterprise value multiples, you go back to a firm valuation models and do the algebra. We even expanded the model to consider high growth companies and saw how changing the growth rate and risk can affect PE. We closed by looking at the perfectly mismatched stock, one with a low PE, high growth, low risk and high ROE. Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession17.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 2 · 1 hr 34 min
Session 16: Value and Price - Discerning the Difference
In this class, we started by looking at why the value and pricing processes can diverge and the difference between investing and trading. Value is driven by cash flows, growth and risk and price is driven by momentum, liquidity and herd behavior. A trader makes money playing the pricing game (buy low and sell high) and an investor from playing the value game (buy something when its price is less than your assessed value and then wait for the gap to close). Each side has its own weaknesses, but it is important that you decide which game you are playing and choose the right tools for that game. We then looked at the process of relative valuation (pricing) by examining what goes into a multiple. Starting on the process of deconstructing the multiple, starting by defining the multiple and checking to see if it is consistently defined and uniformly estimated. We closed the class by looking at the distributions of multiples (left peak, right tail and skewed) and how these distributions show up in the numbers. Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/dcfandprice.pdf Slides: Part 1: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession16a.pdf Part 2: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession16b.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Atest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session16Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 2 · 1 hr 29 min
Session 22: Dividends, Taxes and Trade offs
We spent this session first talking about the shift towards buybacks in recent decades, and how that shift can be explained by the increased desire for flexibility among companies that face more uncertainty about future earnings. We then moved on to two measures of dividend policy - dividend payout and yield, before looking at three schools of thought on dividends that cover the spectrum (dividends don’t matter, dividends are bad, dividends are good)., We ended the class by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year). As you wrap your head around buybacks and what they can and cannot do to companies, you may find the following post that I have on the topic useful (or not): https://aswathdamodaran.blogspot.com/2023/03/data-update-7-for-2023-dividends.html Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr23/session22slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 2 · 17 min
Discount Rate Myth 5: As rates approach zero, value goes to infinity!
In this session, the last of five on discount rate myths, I look at how low interest rates have skewed both actual valuations and how we think about DCF. Specifically, holding all else constant and lowering the risk free rate will cause valuations to implode but you cannot hold all else constant. As risk free rates change, so do nominal growth rates, risk premiums and even debt ratios, making the effect on value much more unpredictable. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/DiscountRateMyth5.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/myth-45-dcfs-break-down-with-near-zero.html Learn more about your ad choices. Visit megaphone.fm/adchoices
October 1 · 1 hr 28 min
Session 22: Real Options - Fact and Fiction
We started this class by looking at the basic option pricing models. After that, we moved on with an examination of option pricing models, and used real options to examine why the rights to non-viable technology can be valuable and why the values of natural resource companies are affected by both the level and variability of commodity prices . As a cautionary note, you are pushing option pricing models to breaking point when using them to value these options, but the key takeaway is that even if you do not value the options explicitly, understanding that they exist can alter how you behave as a business. It is also true that the information that you will need to value many real options will be accessible only if you work at the pharmaceutical or natural resource company, and consequently, you cannot apply it to your company (project), since you will not have that access. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/pvttopublicclosure.pdf Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session22slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Atest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 1 · 15 min
Discount Rate Myth 4: The Discount Rate is the receptacle for all your hopes and fears
In this session, the fourth of five on the discount rate myths, I look at how analysts and appraisers use the discount rate as a receptacle for all their hopes and fears. Specifically, they try to lower (raise) discount rates for well managed (badly managed) companies and to raise discount rates to capture any risks that they see on the horizon. The discount rate in a DCF is a blunt instrument and is designed more for carrying continuous, going-concern risk than discrete and estimation risks. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/DiscountRateMyth4.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/myth-44-ddiscount-rate-is-receptacle.html Learn more about your ad choices. Visit megaphone.fm/adchoices
October 1 · 1 hr 24 min
Session 24: Real Options - Fact and Fantasy
Note: I was off my game in this session, with a voice that was starting to go after two earlier sessions and I forgot to share the slides until half way through the season (You can use the slides link below...) We started this class by looking at the basic option pricing models. After that, we moved on with an examination of option pricing models, and used real options to examine why the rights to non-viable technology can be valuable and why the values of natural resource companies are affected by both the level and variability of commodity prices . As a cautionary note, you are pushing option pricing models to breaking point when using them to value these options, but the key takeaway is that even if you do not value the options explicitly, understanding that they exist can alter how you behave as a business. It is also true that the information that you will need to value many real options will be accessible only if you work at the pharmaceutical or natural resource company, and consequently, you cannot apply it to your company (project), since you will not have that access. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/pvttopublicclosure.pdf Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr23/session24slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Atest.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session24Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices
October 1 · 12 min
Discount Rate Myth 3: The Discount Rate cannot change in a DCF!
In this session, the third of five on discount rate myths, I look at the widely held view that the discount rate in a DCF is a constant. In reality, discount can and should change over the forecast period of a DCF to reflect changes in business, life cycle and profitability that you see in the company that you are valuing. I suggest a simple framework for thinking about how to make these changes. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/DiscountRateMyth3.pdf Blog Post: http://aswathdamodaran.blogspot.com/2016/11/myth-43-d-cannot-change-over-time-in-dcf.html Learn more about your ad choices. Visit megaphone.fm/adchoices

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