Imagine giving a negative value to the shares of a company with positive cash flow forecasts. While it may seem strange, this type of mistake is more common than you think. In his book, 201 errores en valoraciones de empresas (201 Mistakes in Company Valuations), IESE Prof. Pablo Fernández shows how the host of theories and methods available to analysts sometimes leads to confusing results. His aim is not to name and shame, but rather to underscore the importance of avoiding hastiness, oversimplification and formulas. With a little common sense, experience and technical know-how, analysts can avoid valuation absurdities.
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