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Tracking Value with Accounts

Value

The formula for value is:

 

Perpetuity value = CF / Discount rate

 

Accounts and Accounting

In order to track valuation performance of the perpetuity (i..e business), companies create accounts for each item of it’s financial existence. These accounts are the basis of valuation. Valuation is the basis of actions taken in a capitalist economy.

 

Accounts, Accounting & Excel

Excel is the software used to model the accounts of the enterprise and determine the valuation of the perpetuity (i.e. business).

 

Account Filings & Public Data

10-K annual

10-Q quarterly

 

Account Statements: P&L

Income statement (P&L):

Revenues

COGS

Gross Profit

Operating Expenses

EBIT

Interest Cost

EBT

Taxes

Earnings

 

Account Statements: Balance Sheet

Assets = Liabilities + Shareholder’s Equity

Total Assets = Total Liabilities + Shareholder’s Equity

Current Assets + Long Term Assets = Current Liabilities + Long Term Liabilities + Value of Shares Previously Issued + Retained Earnings – Treasury Stock

 

Account Statements: Statement of Cash Flows

CF from Operating

CF from Investing

CF from Financing

 

Statement of Cash Flows is the linkage between the income statement and the balance sheet.

 

Get D&A from SCF (CF from Operations) and CAPEX from SCF (CF from Investing)

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