What a business is worth, which assumption the answer rests on, and where the number comes from.
Match the discount rate to the cash flow: a flow to all capital providers is discounted at the blended cost of all of them.
The discount-rate questions in a DCF interview, and any model where the cash flow and the rate have been matched carelessly.
From WACC Explained · The Finance Storyteller
Every cell in a DCF is a claim about future cash or about its risk; if you cannot say which, the cell should not be there.
The first DCF question in any interview, and whenever a model has grown so large that nobody can say what it is for.
From Session 3: Intrinsic and DCF Valuation — Laying the Groundwork · Aswath Damodaran (NYU Stern)
Value each part a bidder is acquiring; what the bid leaves at zero is the argument against it.
Take-private analysis, fairness opinions, conglomerate valuation and any activist defence of a holding.
From Southeastern Asset Management's letter to the Dell board (February 2013) · Mason Hawkins and Staley Cates
Answer accretion with arithmetic and value with evidence, and never let the first stand in for the second.
Any M&A interview, any accretion-dilution question, and any board case where accretion is offered as the reason to proceed.
From Session 25: Acquisition, a Value Destroyer? · Aswath Damodaran (NYU Stern)
Judge an adjustment by whether an owner of the whole business would also get to ignore the cost.
Reading any earnings release, pitch deck or S-1 that leads with a non-GAAP measure.
From WeWork: Or the Making and Breaking of a $47 Billion Unicorn · 2021
Spending is only growth if the return on it exceeds the cost; estimate the return under several assumptions before admiring the spend.
Any capital-intensive growth story, the AI capital expenditure debate, and valuation of a company reinvesting most of its cash flow.
From Hayden Capital's Q2 2026 letter, on the "SaaS-pocalypse" and returns on reinvestment · Fred Liu
A forecast is a story written in numbers; if a row cannot be said as a sentence about the business, it should not be in the model.
Building or defending a DCF, writing a stock pitch, or reviewing someone else's model.
From Narrative and Numbers · Aswath Damodaran
The right amount of debt minimises the blended cost of capital; the maximum a lender will provide is a different and larger number.
LBO and leveraged finance questions on how much debt a deal can carry, and corporate finance questions on capital structure.
From Session 18: Optimum Capital Structure — The Cost of Capital Approach · Aswath Damodaran (NYU Stern)
Build a margin case from countable inputs, headcount, cost per head and incremental margin on growth, so that every disagreement is about a number.
Activist situations, any margin expansion thesis, and the interview question of how you would improve a company's profitability.
From Starboard Value's letter to Autodesk shareholders on margins and board change · Jeffrey Smith
Decide what a business is worth before looking at the price, then act only when the price is far enough below.
Any stock pitch, any conversation about whether a market move is a reason to act, and any valuation that starts from the price.
From The Intelligent Investor · Benjamin Graham
Treat stock compensation as a cost of doing business; either deduct it from cash flow or count the dilution, and never ignore it twice.
Any technology company valuation, any adjusted EBITDA reconciliation, and the interview question about non-cash charges.
From Session 5: Accounting Inconsistencies · Aswath Damodaran (NYU Stern)
A synergy is a change in cash flow, growth or risk; value it as one, and only then compare it with the premium being paid.
M&A interviews that ask how to value synergies, and any deal where the premium is justified by them.
From Session 12: Acquisition Ornaments — Synergy, Control & Complexity · Aswath Damodaran (NYU Stern)
Check what share of the value is terminal and what multiple the terminal assumptions imply; those two checks catch most broken DCFs.
Any DCF review, any interview follow-up on the terminal growth rate, and any model where the answer seems too sensitive to the last year.
From Session 9: Terminal Value · Aswath Damodaran (NYU Stern)
Publish the method for intrinsic value, then let it decide: buy back below it, issue above it, and keep the multiple consistent so the method cannot flatter.
Valuing a holding company or an insurer with an investment portfolio, and any discussion of how management should decide on buybacks.
From Markel Group's 2023 letter to business partners · Thomas Gayner
A buyback creates value only with funds to spare and a price well below intrinsic value; above that price the same action destroys it.
Any capital allocation question, any company announcing a buyback, and private equity interviews on value creation.
From Berkshire Hathaway's 2011 letter to shareholders · Warren Buffett