An Integrated Approach to Financial Analysis and Valuation

In this webinar, Doron Nissim, the Ernst and Young Professor of Accounting and Finance at Columbia Business School, describes an integrated approach to financial analysis and valuation, providing a unified framework for evaluating core recurring profitability, market and fundamental risks, and growth prospects. The framework incorporates these fundamentals to derive free cash flows, cost of capital, and relative and absolute estimates of intrinsic value.

This approach is particularly relevant today because:

- Interest rates are very low, increasing the present value of long-term profits and its share in total intrinsic value
- High earnings volatility due to COVID-19 makes current and near-term profitability poor proxies for sustainable long-term profitability
- Increased risk of financial distress and greater uncertainty regarding the viability of many businesses strengthen the need for a thorough evaluation of liquidity and solvency
- M&A and restructuring activities, both likely to rise in the future as firms adjust to the new environment, often make reported earnings a distorted measure of true profitability
- Impairment losses and other accounting adjustments triggered by COVID-19 distort current and future values of profitability measures and other ratios

Learn more from Professor Nissim in this executive education program: