Abrams Valuation Group, Inc.
Uniquely Applying Original Valuation Theory

"I seriously doubt we would have raised the capital…without their input."

— Jeffrey Segal, M.D., President and CEO, DarPharma, Inc.

Errata

How to Value Your Business and Increase its Potential
Errata Sorted by Page
# Page Description Date Found
The author thanks Daniel Jordan for finding the first 13 errors.
1 51 11 lines from the bottom: Change "2003" to "2005". 2/27/05
2 57 Second-to-last paragraph: Reword as: "It is important to note that we add or subtract only the change in balance sheet items, while we add the full amount of depreciation expense and subtract the full amount of capital expenditures." 2/27/05
3 99 8 lines from the top: Change 4.00 to 5.00. 2/27/05
4 115 Cell A20: Insert "[2]" after "Discount Rate". 2/27/05
5 162 7 lines up from the bottom: Insert "weighted average" before "cost of". 2/27/05
6 162 6 lines up from the bottom: After "capital", insert footnote reference 15. Then the footnote itself at the bottom of the page should read as follows: "The weighted-average cost of capital (WACC) is calculated as the percentage of total financing provided by debt times the after-tax cost of debt, plus the percentage of total financing provided by equity times the cost of equity, where the latter is the discount rate. Because interest expense is tax deductible, adding small amounts of debt where there was none to begin with normally causes the WACC to decline", because after tax interest rates normally are quite low. However, as one adds increasing amounts of debt, not only do interest rates rise, because there is increasing risk to the lender, but the discount rate on equity can rise, because there is increasing risk to the shareholders that they will receive little to nothing. Ideally, the owner should add exactly the right amount of debt that brings the WACC to its minimum. However, this point varies individually by firm and is still unknown even by industry averages." 2/27/05
7 162 Last line: Delete the word "it". 2/27/05
8 145 Equation (9.3): The exponent should be n+1. 2/27/05
9 146 Equation (9.5), top line: The exponent should be n+1. 2/27/05
10 168 8 lines from the top: Change "m" to "r" [after "discount rate, "]. 2/27/05
11 181 13 lines from the top: Delete "accounts receivable, ". 2/27/05
12 181 14 lines from the top: Delete the comma. 2/27/05
13 192 5 lines from the top: Delete the entire rest of the paragraph, starting with "Of course, that requires …" [This is a repeat of p. 191, 6 lines up from the bottom.] 2/27/05