From the course: Excel for Investment Professionals

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Building a discounted cash flow model

Building a discounted cash flow model - Microsoft Excel Tutorial

From the course: Excel for Investment Professionals

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Building a discounted cash flow model

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- [Instructor] One of the more sophisticated fundamental valuation methods used by investment pros is called a dividend discount model. Let's see how this type of model works and how you can put one together in Excel. I'm in the zero, two, zero, five begin Excel file. Now what we see here is a single stock and information related to it. We've got Microsoft's price per share from the period beginning April 1st, 2014, through September 28th, 2018. We've also got the earnings per share, book value per share, and sales per share for the company during this period as well as various valuation multiples. PE ratio, price to book, price to sales, et cetera. Now in order to build our dividend discount model, we're going to based that on financial information from the company. All firms that are publicly traded release quarterly information on their level of profits, revenues, assets, liabilities, and all sorts of other financial information. So in principle, you could go through and gather by…

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