I have a mental framework that I use when I look at a new company. I’ve never really had a name for it before, but now that I am writing about it, I call it “Generic Company A.” Pretty sexy, right? It is a loose framework for a company and its valuation. The first step is just thinking about a (generic) company. What is a company? I consider a company to be the total of the capital invested into an enterprise to date. That capital usually comes in as cash: equity, debt, or cash earnings. The company deploys it into its enterprise - creating goods or services - in the form of human resources, physical resources (plant and equipment), or intellectual resources (R&D, brand names, customer relationships, etc.). The company as it stands today is just a snapshot of how the capital was deployed into various resources to date.
Generic Company A
Generic Company A
Generic Company A
I have a mental framework that I use when I look at a new company. I’ve never really had a name for it before, but now that I am writing about it, I call it “Generic Company A.” Pretty sexy, right? It is a loose framework for a company and its valuation. The first step is just thinking about a (generic) company. What is a company? I consider a company to be the total of the capital invested into an enterprise to date. That capital usually comes in as cash: equity, debt, or cash earnings. The company deploys it into its enterprise - creating goods or services - in the form of human resources, physical resources (plant and equipment), or intellectual resources (R&D, brand names, customer relationships, etc.). The company as it stands today is just a snapshot of how the capital was deployed into various resources to date.