Valuing Financial Firms, Part 1: What Is FCFE and How Does It Differ from FCFF?
In Part 8, we established that FCFE is the right tool for banks. Now let's learn exactly how it works. In Part 8, we handed back the socket wrench and…
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Valuing Financial Firms
A Five-Part Sub-Series
Banks, insurers, and other financial companies operate by rules that break the standard valuation models. This series shows you exactly how to value them.
Part 1
Part 2
Valuing Financial Firms, Part 2: From FCFE to Intrinsic Value — Building the Bank DCF
In Part 1, we learned how to calculate FCFE for a single year. Now we project it forward and turn it into a number you can act on. In Part…
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Valuing Financial Firms, Part 3: Normalizing Earnings for Insurance Companies
In Part 2, we flagged that insurance companies need a different kind of earnings normalization. Here’s exactly how to do it. In Part 2, we built a complete DCF for…
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Valuing Financial Firms, Part 4: Risk and the Discount Rate
Valuing Financial Firms, Part 4: Risk and the Discount Rate We have the cash flows. Now we need to know what they're worth. That depends on risk — and risk…
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Valuing Financial Firms, Part 5: Putting It All Together
Valuing Financial Firms, Part 5: Putting It All Together You have everything you need. Now let's use it. Four posts ago, we said that valuing a financial firm requires different…
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