FCFF vs. FCFE and what book on valuation if only one to choose?


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Posted by JV on January 06, 19101 at 13:47:53:

Hello I am a student that took up a class in Finance but have had the sinking feeling that my teacher goofed off and left me with very little actual knowledge to show for it. Anyways I was wondering what the main differences between FCFF and FCFE are. I notice the DCF Valuator is based on FCFE but I've read a simple book that preferred FCFF but didn't exactly say why. While we're on the subject of books, if I were to buy but one book to learn valuation which would you recommend? I have a limited budget. Would you still recommend Williams' The Theory of Investment Value over any of Damodaran's books, the McKinsey book by Koller Murrin and Copeland Valuation: Measuring and Managing the Value of Companies or Security Analysis? Also the site seems to prefer Williams' book over Security Analysis by referring to the latter as having a "saving grace" and why that may be so piques my curiosity. Thanks for running such an informative site =)


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