How to Invest in Stocks: Business Worth Example

Understanding the future amounts of money owners of a business can earn is the key to all valuation estimates. This amount is often confused with dividends. No, it is not dividends. Rather, it is money the company has as left-over after paying its important bills. Some call it the free cash flow(FCF), but a truer picture is painted by owners earnings which differs a bit from FCF. In this video, we use the owner's earning, a risk-free rate of Fed's 10-year note and other key factors to establish a worth for a company. We also went further to calculate the margin of safety for this investment. The key question is there other ways to go about this is? Yes, there is. Our next video shall look into it.