BU121 Study Guide - Final Guide: Pharmaceutical Industry, Preferred Stock, Cash Flow
Document Summary
Finance final notes bu121. Shift from entrepreneur to manager: Important to retain your entrepreneurial characteristics to encourage innovation and creativity by transferring your spirit to employees. Nv plans don"t go as planned: 2. There are too many unknowns for valuing early stage companies (in early stage atleast 2 of the. 3 things are subject to substantial uncertainty) Valuation professionals need to know 3 things to value any asset: Income stream: a growth rate, a discount rate, consdierations in applying income approach: Because the development of projections depends on specific outcomes and milestones, one scenario of cash flow is inadequate. The risk of failure is likely higher than the present value discount rate: venture capitalists consider portfolios of investments. If losses are forecast in the first few years, it is likely that they will occur and even greater ones. Subjective factors of income approach: Capital needs (5k vs 500k)
