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One can improve their skills in investment valuation by gaining a deep understanding of financial metrics such as Return on Invested Capital (ROIC), reinvestment rate, and valuation multiples. It's also beneficial to practice forecasting net income and equity value, and comparing returns over the long term. Understanding the sensitivity of returns to these core assumptions is also crucial. Additionally, continuous learning through reading books, attending workshops, and taking courses on investment valuation can also be very helpful.
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Do you need to weigh up several investment projects or public companies to invest in? This spreadsheet compares the efficiency of capital use between companies based on assumptions of Return on Invested Capital (ROIC), reinvestment rate and valuation multiples. Then, net income and equity value forecasts are derived and returns are compared over the long term by the company. The sensitivity of returns to the core assumptions is also provided.
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Need help with which companies or projects to invest in? As a key driver of value in business, ROIC measures how well the company deploys its capital....
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