Errors in 110 Common Errors in Company Valuations
4 Pages Posted: 10 Feb 2008 Last revised: 10 May 2012
Date Written: February 8, 2007
In the recent paper focused on the errors in actual valuations performed by financial analysts, investment banks and financial consultants Fernández and Bilan (2007) suggest corrections for nearly all identified mistakes, thus providing valuable insights for both academics and practitioners. However, instructive example of a proper valuation in the section 1.D Wrong Calculation of WACC on page 9 of Fernández and Bilan (2007) also contains errors. This note discusses the origin of these errors and the way to eliminate them.
Keywords: company valuation, valuation errors, cost of capital, leverage, WACC
JEL Classification: G12, G31, M21
Suggested Citation: Suggested Citation