Valuation Mistakes
Mistake #5: Forecasting Drastic Changes in the Cash Conversion Cycle
Mistake #5, which we’re going to talk about now, is forecasting drastic changes in the cash conversion cycle. First though, let’s review the full list of Top 9 Mistakes. Catch up with the other posts here. The Top 9 Valuation Mistakes Overly optimistic revenue forecasts Underestimating expenses causing unrealistic profit forecasts Growing fixed assets slower…
Mistake #4: Confusing Growth Capex with Maintenance Capex
The top #4 valuation mistake takes us into a discussion about confusing growth Capex with maintenance Capex. Many analysts miss the relationship between Capex, depreciation, and sustainable growth. Which is why we’ll review these aspects within this chapter. First though, a quick recap of the full list of Top 9 Mistakes. The Top 9 Valuation…
Mistake #3: Growing Fixed Assets Slower than Revenue
Today, let’s talk about mistake #3: Growing fixed assets slower than revenue. First though, a quick recap of the full list of Top 9 Mistakes. The Top 9 Valuation Mistakes Overly optimistic revenue forecasts Underestimating expenses causing unrealistic profit forecasts Growing fixed assets slower than revenue Confusing growth with maintenance Capex Forecasting drastic changes in…
Mistake #2: Underestimating Expenses Causing Unrealistic Profit Forecasts
Welcome to the second installment of my Top 9 Valuation Mistakes blog series. In today’s post, we’ll examine Valuation Mistake #2: Underestimating expenses causing unrealistic profit. Let’s just quickly remind ourselves of the full nine valuation mistakes that analysts are in danger of making. The Top 9 Valuation Mistakes Overly optimistic revenue forecasts Underestimating expenses…
#1 of the Top 9 Valuation Mistakes: Overly Optimistic Revenue Forecasts
During my career, I built highly complex and detailed financial models early on as an analyst, but I later realized that the increased complexity surrounding such models rarely translates into increased accuracy. This series of articles is somewhat inspired by that revelation: I’m going to expand on the Top 9 Valuation Mistakes and reveal how…