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This guide is an introduction of functions withing the Bloomberg Terminal that help to do the absolute valuation of a company

A **valuation **helps to determine what a company is worth and whether its price is reasonable.

- The valuation of the company is inherently subjective;
- The objective of valuation is to find out what a willing buyer will pay to a willing seller;
- Valuation gives the cost basis for the investment;
- A lower valuation at the time of investment does provide investors with higher profits;
- “Moneyball” – is a good analogy. Buying undervalued players is very similar to buying undervalued stocks.

The a**bsolute valuation** is a process by which we assess the current intrinsic value of the company, independently of price.

Absolute valuation is based on 5-step process:

- Estimating long-term future cash-flows of the firm;
- Estimating the rate at which to discount those cash-flows to derive today’s value;
- Discount the estimated future cash-flows by the Weighted Average Cost of Capital (WACC);
- Take the total firm value and derive the market capitalization from it;
- Estimate fair share price.

*Side-note: Estimating long-term future cash-flows is the most challenging step in the absolute valuation process. It involves making assumptions upon which future performance of a share will be projected.*

*Trivia*

> https://soundcloud.com/bloombergview/joel-greenblatt-discusses-the-thrill-of-investing;

> https://en.wikipedia.org/wiki/Moneyball