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Mauboussin on Discounted Cash Flow Models
Legg Mason has just released Michael Mauboussin’s latest paper on strategy. In Common Errors in DCF Models, Mauboussin takes a look at eight common mistakes he sees analysts make when assessing the value of a company using a discounted cash flow model. It’s a great overview of best practices to use in generating the most accurate valuation possible (or the most accurate collection of possible valuations — he takes pains to point out that investing is a probabilistic undertaking, and suggests using scenario and sensitivity analysis to mitigate the risk of putting all your eggs in one valuation basket, so to speak). A great resource for anyone preparing valuations on a company!
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Mauboussin on Strategy: Common Errors in DCF Models
Previously:
- Mauboussin on Strategy: Size Matters
- All posts tagged Michael Mauboussin
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