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To: greenspirit who wrote (60968)	7/22/1998 10:20:00 AM
From: Reginald Middleton	Respond to of 186894

<Hi Reginald, how have your sites formula's held up through all this internet stock mania?> Over the long term they have done well. Let me make clear that this is not a crystal ball. All the formulas do is strip away all accounting incongruities in order to reveal the real earnings of a company. From this point you then measure the amount of capital deployed in producing said earnings, divide the result into the earnings and discount the result by the risk adjusted discount rate of the firm in question. This is how most modern institutions value companies (of course everybody puts their own spin on it). The brain work comes in guesstimating the correct growth rates and other assumptions. The academic framework for this style of valuation has been in place and practiced for over 35 years. The balance sheet is what shows you the capital employed by a company at any given time (it must be adjusted for accrual accounting distortions). I know you probably have seen the article already, but for those who have not read my diatribe on growth companies and earnings, see rcmfinancial.com . If you have Excel 97, there is downloadable software which adjusts income for you in order to reveal true operating profit. If you do not have Excel 97, the article lists the formulas for you in HTML.