[Verse 1] When you want to find a stock's true worth today There are models that will light the valuation way Discounted cash flow takes future money streams And brings them back to present value dreams [Chorus] DDM for dividends, FCFE for equity cash FCFF for the whole firm, residual income's not rash Price-to-earnings ratios, book value multiples too Asset-based approaches when the company's in two Valuation models help us see what stocks are really worth From Gordon growth equations to sum-of-the-parts on Earth [Verse 2] Gordon growth assumes dividends increase each year Two-stage and three-stage when growth rates aren't clear H-model smooths the transition from high growth to low Free cash flow to equity shows what shareholders know [Chorus] DDM for dividends, FCFE for equity cash FCFF for the whole firm, residual income's not rash Price-to-earnings ratios, book value multiples too Asset-based approaches when the company's in two Valuation models help us see what stocks are really worth From Gordon growth equations to sum-of-the-parts on Earth [Verse 3] Residual income measures profit above the cost Economic value added shows if value's gained or lost Clean surplus relation keeps the books in line Choose your model wisely based on company design [Bridge] Trailing P-E looks backward, forward P-E looks ahead Price-to-book and price-to-sales keep multiples widespread EV-EBITDA, EV-Sales for enterprise value play Compare to similar companies to guide you on your way [Verse 4] When companies are holding assets or in distress Or natural resources need an asset-based assess Sum-of-the-parts breaks down each business unit's worth Adjusted book value brings fair market to the Earth [Chorus] DDM for dividends, FCFE for equity cash FCFF for the whole firm, residual income's not rash Price-to-earnings ratios, book value multiples too Asset-based approaches when the company's in two Valuation models help us see what stocks are really worth From Gordon growth equations to sum-of-the-parts on Earth [Outro] Choose your model carefully, let company traits decide With these valuation tools, you'll value stocks with pride
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