Hi. Welcome back to Finance for Non-Finance Professionals. As we wrap up week one, I thought it would be fun to talk to a practitioner. Somebody who's actually in the field, doing a lot of the stuff that we've been talking about. So, I've got Christine Boyd here with me. Hi, Christine? Hi, James. Thanks for having me. My name is Christine Boyd. My background is in corporate finance departments. I've been working with investors, managing capital budgeting processes, and doing deals. So. Great, thanks for being here Christine. Great to be here. So, in the first week, we spent a lot of time talking about compounding, and discounting, and moving cash flows backwards and forwards in time. A lot of the motivation for doing that was for valuation purposes. We wanted to put a value on businesses, or projects, or assets. We went through a couple of different valuation techniques in the first week, and I wanted to get a practitioner's perspective. What kinds of different valuation techniques do you see when you're out in the field? Absolutely. I'll start out by saying that, all of the valuation techniques that we've been studying this week are used in the field. So, to do a thorough evaluation when it's something very important to the company, we build a model that incorporates all three of those techniques, comparables, ratios, and DCFs, and applies a weighting factor. The weighting factor will typically represent a confidence level that we have in each of those methods. That's interesting. Yeah. So, you'll use all the different valuation techniques? Absolutely. Then sometimes, you'll put a different weight. You'll do a little bit of ratio. Put that in perspective. Yeah. Do a little bit of DCF, and then balance all the different ones together? Exactly. That is interesting. So, and in my experience usually comparables, we use that opportunity to grab comparable transactions rather than, I think you guys have talked about comparable ratios. Yeah. Technique, and we use transactions. We find recent sales of some kind that best represent whatever we're looking at, whether the project or a company. Comparable transactions very valuable, the DCF probably always had the highest weighting factor. Okay. That makes me happy to hear. Yes, DCF. Yeah. When I think about the cost and the benefits of doing those different techniques, I usually think of the comparables and the ratios as much simpler. Yeah? Exactly. So, if I want to get a ballpark estimate of where the valuation is, a lot of times those ratios and comparables can help me narrow in on what's a reasonable framework? What's a reasonable ballpark for putting a value on something? Absolutely. So, some of my experience, I've worked with Wall Street Analysts. Those are calm sell-side analysts. The ones who dig in to companies and model them thoroughly, and provide their estimate to the street about buy sell hold. So, I had an opportunity to work with a lot of those, and they also incorporate all three methods into their valuation. But some of their customers probably looking at stocks or buying companies aren't quite as sophisticated, right? Right. As your typical corporate finance department. Yeah. Or your sell-side analysts for sure. So, yes comparables and ratios are much simpler to get to, simpler to find the numbers on public, websites. Easier to communicate, yeah. Easier to understand. So, that is interesting. So that, this kind of cashflow might give us a more accurate precise measure of the valuation, especially if I was going to buy a large public company. Right. That go through the hard work of doing the DCF. Absolutely. Yes. Yeah. Whereas, if I was going to buy something. A share of stock. A share of stock, yeah. If I was going to buy something like a pizza parlor, or a bar, or restaurant. Right. Where it's really hard to measure, what future sales are going to be. Yes. It's hard to get comparable. Yes. I might do some ratio analysis, just to make sure I was in the ballpark or something. Right. So, there's a lot of uncertainty. The simpler methods tend to dominate. Absolutely. Where we can get better forecasts of what the assumption is going into the DCF or, that makes the return on doing the hard work of a DCF better. Right. Yeah. Okay. That's interesting. Good. Yes. Well, Christine. Thanks for coming in. Absolutely. It was about the trade offs of different valuation techniques. Thanks for having me, James. That wraps up week one. Next week, we're going to talk about capital budgeting techniques. We're going to have another conversation with Christine about using capital budgeting practice.