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Pascal edited section_textit_DDM_textit_RIM__.tex
almost 8 years ago
Commit id: 1ec9c8700d5c4f981e20870b88423a4f68998517
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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}