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| List of Figures | |
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| Preface | |
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| Acknowledgments | |
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| Setting the Stage | |
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| Purpose and Scope | |
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| Who Values Stocks? | |
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| Corporate Managers | |
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| Financial Analysts: Investment Banking | |
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| Financial Analysts: Equity Research | |
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| Asset Managers | |
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| Individuals | |
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| Economic Policymakers | |
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| The Objective of Equity Investment | |
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| Related Concepts | |
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| Earnings vs. Cash Flow | |
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| Good Companies vs. Good Stocks | |
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| Size Matters | |
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| Growth vs. Value | |
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| Few Stocks vs. Many Stocks | |
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| Broad-Based Portfolios vs. Concentrated Portfolios | |
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| The Investment Process | |
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| Market Selection | |
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| Class/Industry Selection | |
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| Asset Selection | |
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| Organization of the Book | |
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| Case Study: O'Charley's | |
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| Price Formation, Market Efficiency, and Great Investors | |
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| Purpose and Scope | |
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| How Are Prices Determined? | |
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| Types of Orders | |
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| Dealer Markets | |
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| Auction Markets | |
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| What Have We Learned about Price Formation? | |
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| Market Efficiency | |
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| The Evidence | |
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| A Few of the Great Investors | |
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| The S&P 500! | |
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| Warren Buffett | |
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| Peter Lynch | |
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| Bill Miller | |
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| Putting It All Together | |
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| In Practice ... | |
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| Case Study: O'Charley's | |
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| The Time Value of Money | |
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| Purpose and Scope | |
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| In Theory ... | |
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| The Discount Rate | |
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| Multiple Cash Flows | |
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| Implied Discount Rates | |
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| In Practice ... | |
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| Expressing Interest Rates | |
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| Application: Retirement Planning | |
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| Summary | |
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| Understanding Financial Statements | |
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| Purpose and Scope | |
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| Financial Statements | |
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| The Balance Sheet | |
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| The Income Statement | |
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| The Statement of Cash Flows | |
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| Linkages Between the Statements | |
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| Building the Free Cash Flow Equation | |
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| Sales and Cost of Goods Sold: Implications for Free Cash Flow | |
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| Dealing with Capital Expenditures and Depreciation | |
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| Cash | |
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| The Free Cash Flow Equation | |
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| Other Cash Flow Items | |
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| In Practice ... | |
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| Nonsynchronous Financial Statements | |
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| Differences in Terminology and Reporting Structure | |
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| Case Study: O'Charley's | |
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| A Note on SFAS No. 123R | |
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| Summary | |
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| Interpreting Financial Statements | |
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| Purpose and Scope | |
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| In Theory ... | |
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| Common Size Financial Statements | |
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| Indexed Financial Statements | |
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| The Turnover Balance Sheet | |
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| The DuPont Method | |
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| Special Ratios | |
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| Unused Assets | |
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| In Practice ... | |
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| Identifying Misleading Items | |
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| Case Analysis: O'Charley's | |
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| Case Study: Applebee's | |
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| Summary | |
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| Capital Structure and the Cost of Capital | |
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| Purpose and Scope | |
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| In Theory ... | |
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| The Pecking Order Theory | |
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| Internal Financing | |
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| External Financing | |
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| Signaling Effects | |
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| The Cost of Capital | |
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| In Practice ... | |
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| Problems with Estimating the Cost of Debt | |
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| Problems with Estimating the Cost of Preferred Stock | |
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| Problems with Estimating the Cost of Equity | |
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| Problems with Estimating Weights for the WACC Calculation | |
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| Case Study: O'Charley's | |
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| Summary | |
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| Forecasting | |
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| Purpose and Scope | |
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| In Theory ... | |
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| Growth from Retained Earnings | |
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| The Forecasting Process | |
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| In Practice ... | |
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| Case Study: O'Charley's | |
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| Summary | |
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| Valuing Employee Stock Options | |
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| Purpose and Scope | |
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| In Theory ... | |
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| The Black-Scholes Option Pricing Model | |
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| Valuing Yet-to-Be-Issued Employee Stock Options | |
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| In Practice ... | |
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| A Note on Dilution-Based Approaches | |
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| Different Contracts and Lack of Complete Information | |
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| Early Exercise | |
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| Case Study: O'Charley's | |
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| Summary | |
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| Relative Valuation and Screening | |
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| Purpose and Scope | |
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| In Theory ... | |
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| A Note on Model Error | |
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| Screening | |
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| Comparables ("Comps") Analysis | |
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| Discounted Dividends and the Malkiel Model | |
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| A Relative Version of the Malkiel Model: Growth-Adjusted Comps | |
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| In Practice ... | |
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| Equity Research and Investment Banking | |
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| What Stocks Can We Include? | |
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| Outliers | |
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| Analyst Growth Rates | |
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| Case Study | |
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| Summary | |
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| The Discounted Cash Flow Model | |
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| Purpose and Scope | |
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| In Theory ... | |
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| The DCF Model | |
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| In Practice ... | |
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| Case Study | |
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| Other Recommended Readings | |
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| Bibliography | |
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| Index | |