Pascal PIERRE edited section_Building_a_Profitability_Valuation__.tex  over 6 years ago

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\\  Secondly, we need to define the different components of the model. We follow Damodaran and use his definitions. We are quite aware that there exists numerous definitions for each of the following concepts but Damodaran's definitions can serve as a starting point, where other definitions are refined versions of these basics definitions. Specifically, Damodaran posts articles on his blog (\textit{http://pages.stern.nyu.edu/~adamodar/}) that summarize the courses he teaches at the Stern School of Business at New York University. In an article posted in 2013 entitled "A tangled web of values: Enterprise value, Firm Value and Market Cap" Damodaran gives a very clear definition of the accounting concepts we will be using. As a starting point, the balance sheet allows us to write the following accounting identity :  \begin{equation}  Cash & Other Non-Operating Assets+Operating Assets=Debt+Equity Assets=Debt+Equity+Short Term Liabilities  \end{equation}  Operating Assets are comprise of Fixed Assets, Intangible Assets and Working Capital, so that we have :  \begin{equation}