Foundations of Corporate Valuation and Value Creation

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Provider

Coursera
Pricing

Paid Course
Languages

English
Certificate

Certificate Available
Effort

9 weeks, 1 hour a week
Sessions

Self-Paced
Level

Intermediate
Subtitles

English

Found in

Part of

Corporate Valuation and Financial Analysis

Overview

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Explore the essential principles of corporate valuation, including value creation, risk, cost of capital, and the impact of market performance. Gain a solid grounding in the financial concepts that underpin effective valuation and strategic decision-making. This course introduces the core concepts of valuation, focusing on the relationship between growth, return on invested capital, and shareholder value. Learners will examine the fundamentals of risk, cost of capital, and the influence of stock market expectations, as well as the valuation of ESG and digital initiatives. By the end of the course, participants will understand how value is created and measured, and how these principles guide financial strategy and performance. The course combines clear explanations of foundational valuation concepts with real-world examples and practical analysis. Learners will engage with readings, videos, and quizzes to reinforce understanding and apply key ideas to business scenarios. This course is part one of a three-course Specialization designed to provide a comprehensive learning pathway in this subject area. While it delivers standalone value and practical skills, learners seeking a more integrated and in-depth progression may benefit from completing the full Specialization. From Valuation Copyright © 1990, 1994, 2000, 2005, 2010, 2015, 2020 by McKinsey & Company. All rights reserved. Used by arrangement with John Wiley & Sons, Inc.

Syllabus

Why Value Value?

This module explores the foundational principles of value creation in business, examining the importance of long-term strategies over short-term gains. Learners will investigate the roles of shareholders and stakeholders, the pitfalls of short-termism, and the broader implications for corporate governance and economic stability. Through real-world examples, the module highlights the consequences of neglecting value-creation principles.

Finance in a Nutshell

This module explores how companies create value by balancing growth and return on invested capital, using real-world business scenarios. Learners will follow the journey of Lily's Emporium, examining strategic decisions such as expansion, going public, and diversifying formats. By the end, you'll understand key financial concepts that drive business success.

Fundamental Principles of Value Creation

This module explores how companies generate value by analyzing the interplay between cash flow, revenue growth, and return on invested capital (ROIC). Learners will examine key financial concepts such as economic profit, the value driver formula, and the strategic implications for managers. The module also covers the historical foundations and mathematical principles underlying value creation.

Risk and the Cost of Capital

This module explores the relationship between risk and the cost of capital in corporate finance, addressing common misconceptions and strategic pitfalls. Learners will examine how companies assess and manage different types of risk, make informed decisions about cash flow uncertainty, and determine when to hedge or embrace specific risks. Practical examples from various industries illustrate how these concepts impact real-world financial decisions.

The Alchemy of Stock Market Performance

This module explores how total shareholder returns (TSR) are used to evaluate company performance, highlighting the influence of investor expectations and real-world examples from the food industry. Learners will gain insights into the challenges managers face when using TSR as a performance metric and understand the implications of the 'expectations treadmill.'

Valuation of ESG and Digital Initiatives

This module explores how environmental, social, and governance (ESG) factors and digital initiatives contribute to business value creation. Learners will examine the challenges of valuing these emerging priorities and discover strategies for leveraging them to drive revenue growth, optimize investments, and enhance organizational performance.

The Stock Market Is Smarter Than You Think

This module explores the relationship between stock prices and economic fundamentals, debunking common myths about market behavior, earnings management, diversification, and value distribution. Learners will examine empirical evidence to understand what truly drives company value and how market mechanisms operate beyond conventional wisdom.

Return on Invested Capital

This module explores the key drivers of return on invested capital (ROIC), including how competitive advantage, cost and capital efficiency, and network economies contribute to value creation. Learners will examine industry trends, the stability of ROIC across sectors, and the importance of product renewal in sustaining high returns. By the end, you'll understand how strategic decisions impact a company's ability to generate superior returns.

Growth

This module explores the drivers and strategies behind corporate growth, examining how different approaches impact value creation. Learners will analyze empirical research on growth patterns and learn to assess the sustainability of growth projections for strategic decision-making.