deletions | additions       diff --git a/section_Building_a_Profitability_Valuation__.tex b/section_Building_a_Profitability_Valuation__.tex  index c274f36..ff5da43 100644  --- a/section_Building_a_Profitability_Valuation__.tex  +++ b/section_Building_a_Profitability_Valuation__.tex 
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\begin{equation}  EV_{t}=\displaystyle\sum_{i=t+1}^{t+K}\frac{FCFF_i}{(1+R)^i}+EV_{t+K}  \end{equation}  where $EV_{t}$ is the enterprise value of thevalue of the  firm receiving the free cash-flows ($FCFF$). \\  \\  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" Damodaranhe  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  \end{equation} 
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Thirdly, we need to identify a certain number of accounting identities similar to the ones we used for the \textit{RIM} in order to link cash-flow generation, the balance sheet and the market value of the balance sheet.  \\  \\  As its name suggests, the \textit{RIM} hinges on the clean surplus accounting identity, where profits that are not distributed to shareholders are reinvested in the firm thus changing the value of the equity. Similarly, the cash generated by the firm that is not distributed to equity holders and debt holders is reinvested in the firm and we have the following \textit{FCFF} definition :   \begin{equation}  FCFF_{t}=NOPAT_{t}+NetCapex_{t}  \end{equation}  Where $NOPAT_{t}$ is the Net Operating Profit After Tax at time $t$ and $NetCapex_{t}$ are the Capital Expenditures Net of Depreciation