878  Index
fundamentals, 27–53
importance, vs. value distribution, 
125
math of, 49–52
and revenue growth, 158–163
ROIC and growth, 27–29
senior management tasks, 547
and share repurchases, 111
Value distribution, 125
Value drivers, 554–559, 569
flexibility, 766–767
long-term, 558–559
medium-term, 557–558
short-term, 556–557
Value driver trees, 555, 560–565, 569, 
748–749
Value measurement, in digital 
initiatives, 91–92
Value per share, calculating, 
335, 355
WACC. See Weighted average cost of 
capital (WACC)
Walmart, 418–419
Webvan, 127–128
Weighted average cost of capital 
(WACC), 56–57
calculating, 306–307
components of, 305
Costco, 852
defined, 50
discounting free cash flow at, 
188–189
in emerging markets, 701
in forecasting, 261, 280–281
in operating leases, 450
Whole Foods, 128, 678
WorldCom, 110
Write-downs, 112–113, 433
Write-offs, 433
Zeneca, 536
Zimmer, 618
intercompany transactions, 398–401
mechanics of, 392–396
multiples of peers valuation, 406–408
public information, 402
ROIC breakdown, 394
valuation summary, 404
Valuation frameworks, 177–204
chart of, 178
DCF alternatives, 202–204
DCF-based approaches
adjusted present value (APV), 
177–178, 195–196
capital cash flow, 199
economic profit, 177–178, 
191–195
enterprise discounted cash flow, 
178–191(see also Enterprise 
discounted cash flow)
equity cash flow, 200–202
digital initiatives, 93
ESG and digital initiatives, 84
Valuation metrics, 257, 280–281
Valuation results, analyzing, 357–366
art of valuation, 366
consistency check, 358–360
model validation, 357–360
plausibility check, 360–361
scenario analysis, 362–366
sensitivity analysis, 360–362
Valuation summary, in forecasting, 
262
Value
defined, 4–5
spending to maximize value, 571
Value conservation principle. See 
Conservation of value principle
Value creation:
from acquisitions (see Mergers and 
acquisitions (M&A))
balancing ROIC and growth, 24–25
economic profit, 40–42
and ESG, 85–86
examples, 17–25, 35–36
Valuation by parts (continued)

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