Sources Of Value: A Practical Guide To The Art And Science Of Valuation

This page intentionally left blank Sources of Value Sources of Value is a comprehensive guide to financial decision-making suitable for beginners as well as experienced practitioners. It treats financial decision-making as both an art and a science and proposes a comprehensive approach through which companies can maximise their value. Beginners will benefit from its initial financial foundation section which builds strong basic skills. Practitioners will enjoy the new insights which the eponymous Sources of Value technique offers – where value comes from and why some companies can expect to create it while others cannot. The book also introduces several other techniques which, together, spell out how to combine strategy with valuation and an understanding of accounts to make a fundamental improvement in the quality of corporate financial decision-taking. Sources of Value is written in a readable conversational style and will appeal to those already working in companies as well as those studying on a business course. Simon Woolley is a Fellow of Judge Business School, University of Cambridge and Managing Director of Sources of Value Ltd. He has had a long career with the oil major BP, working in a number of roles related to investment valuation and financial training, culminating in the position of Distinguished Advisor – Financial Skills. Sources of Value A Practical Guide to the Art and Science of Valuation Simon Woolley CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521519076 © Simon Woolley 2009 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2009 ISBN-13 978-0-511-53980-0 eBook (EBL) ISBN-13 978-0-521-51907-6 hardback ISBN-13 978-0-521-73731-9 paperback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Contents List of figures Preface Acknowledgements Section I  The five financial building blocks 1 2 3 4 5 Building block 1: Economic value Building block 2: Financial markets Building block 3: Understanding accounts Building block 4: Planning and control Building block 5: Risk