About Art Young Expertise So your investigating a company you`d like to invest in, but you`re not sure what the financial statements are telling you? Then we can work together to help you understand the Balance Sheet, Income Statement and Statement of Cash Flows so you can evaluate the businesses current financial position.
Experience I hold an MBA and have applied my strategies to my own portfolio with great success.
Organizations American Association of Individual Investors
Publications www.mmzero-llc.com/fp
Education/Credentials BS Mechanical Engineering
Master of Business Administration
Expert: Art Young Date: 3/12/2001 Subject: Intrinsic value of a company
Question Dear Art,
I was wondering how would you go about trying to estimate the intrinsic value of a company based soley on the balance sheet. I am asking you this as I wish to apply a Buffetian analysis to a few companies I wish to invest in.However, obtaining the true value of a company eludes me.
thanks,
Richard
Answer Hi Richard,
There are many ways to attempt to value a company, but it is an inexact science, at best.
When you buy a company, you're really buying a piece of the company's future cash flows or net earnings. So you'd think that estimating value would revolve around estimating future earnings, which is what the analysts do every day, with varying degrees of success.
I look at many things when valuing a company. I'll refer you to The Motley Fool's Rule Maker strategy, where they've had a good discussion going on this very subject. Here's a good place to start: http://www.fool.com/news/foth/2001/foth010220.htm. It's an article about the valuation of Siebel Systems. You'll also want to paruse the Rule Maker Archive to find other valuation articles.
And when you're done, click on over to my website www.mmzero-llc.com/fp and where I think you'll find some interesting tidbits. And you can also sign up for my free email newsletter. See the latest issue at www.mmzero-llc.com/fp/email.
Best of luck to you,
Art Young
Mile Marker Zero, LLC
art.young@mmzero.com
www.mmzero-llc.com/fp
