Pascal edited section_textit_DDM_textit_RIM__.tex  almost 8 years ago

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\\  \\  As a conclusion to this section, hereafter are the important ideas we wish to highlight before moving on to the cash-flow approach :   \\. The \textit{RIM} is a derivation of the the \textit{DDM} using clean surplus accounting and introducing the abnormal earnings concept  \\. The \textit{RIM} helps us better understand the notion of value creation and the relationshipe between value creation and valuation  \\. \textit{PB-ROE} is a simplified version of the \textit{RIM} the same way the \textit{GGM} is a simplified version of the \textit{DDM}.   \\. Valuation multiples are simple versions of multi-period discounting models and as such are very helpful as a starting point for stock selection (through screening for example).  \begin{itemize}  \item The \textit{RIM} is a derivation of the the \textit{DDM} using clean surplus accounting and introducing the abnormal earnings concept  \item he The  \textit{RIM} helps us better understand the notion of value creation and the relationshipe relationship  between value creation and valuation \item \textit{PB-ROE} is a simplified version of the \textit{RIM} the same way the \textit{GGM} is a simplified version of the \textit{DDM}.   \item Valuation multiples are simple versions of multi-period discounting models and as such are very helpful as a starting point for stock selection (through screening for example).  \item As a consequence, it is advised to build more sophisticated valuation models after the initial screen.  \end{itemize}