Book-review: The Little Book of Valuation, Damodaran

I did not expect to learn anything new here, but (re-) reading the very basics can work wonders, sometimes.

If you prefer to read the pdf version click here. (links may not work in pdf)

(as in my previous book review I focus more on my learnings/insights/personal summary vs writing style etc.)

Damodaran is the institution on valuation and my curriculum included many referenced textbooks.

I rarely used them during studies, because my profs provided enough and very detailed materials, thus I mostly used textbooks for writing thesises.

I got this book together with two other Damodaran books and this is the smallest and should be the easiest and most basic read.

I did not expect to learn anything new here, but (re-) reading the very basics can work wonders, sometimes.

I enjoyed the sections on multiples, transforming formulas into other multiples and the focus on companion variables for multiples. From a simple DDM model, you can derive a PE or P/B formula.

MultipleCompanion variable
P/Egrowth rate
P/BVROE
P/SNet margin
EV/EbitdaReinvestment rate
EV/CapitalReturn on capital
EV/SalesAfter-tax operating margin

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One thought on “Book-review: The Little Book of Valuation, Damodaran

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