Answer for Formulas

Hi Elly,

First and foremost, Module 3 in our series of videos goes into great detail on how to build the template on your own. That was done on purpose so that members can understand each and every line of formula that they have to key in. The emphasis here is to make sure you understand the formulas very well, and not to rely on them mechanically.

We are careful not to give out completed templates filled out with formulas because there is an inherent danger for some people to “over-rely” on the template to make their investment decisions. I would like to remind everyone that while the template is a quick and dirty way to estimate the valuation of the business, it is not the only thing you should look at. We must first ensure that it is a good business. The criteria of a good business are highlighted in Module 2. This step is crucial because crunching out numbers based purely on a template has a tendency to give people a false sense of confidence when it comes to making investment decisions. That is why I emphasize time and again the importance of having a significant margin of safety.

About The Author

Peter Lim

Investor (Not Speculator).