AI generated — Fundamentals of Valuation

AI Summary: The text is an excerpt from a PDF book titled “Fundamentals of Company Valuation” and aims to provide an overview of various valuation techniques. The text starts by explaining fundamental financial concepts like debt, equity, compounding and rate of return. It then progresses to introduce the concepts of no arbitrage and net present value (NPV). The text further explains how leverage and rate of return are not related in a functioning market. Finally, the text discusses financial ratios and their application in company valuation, specifically using the examples of LVMH and Samsung. It then outlines the principles of building a financial model for valuation, emphasising the importance of choosing appropriate growth rates, capex fractions, and tax rates.