Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
firmorenterprisevalue,themeasuresofearningsthatweuse havetorelatetotheentirefirm.Threemeasuresofoperating earnings are potential ...
If we choose to leave the value of minority holdings in enterprisevalue(asmanyanalystsdo),wehavetocountthe proportionate share o ...
Book Value Measure Value Measure Bookvalueof capital=Book valueofequity+Bookvalueof debt Firmvalue =Marketvalue ofequity+Marketv ...
Theestimatedmarketvalueofminorityholdingsin other firms should be subtracted from the market valueofequitytoarriveattheenterpri ...
Enterprisevaluemultiples,liketheequitymultiplesthatwe examinedinthepreceding chapter,havewide ranges,with somefirmstradingatextr ...
withtheaverageandmedianbutalsoincludingthe10thand 90th percentilesof thedistribution.(Chapter 8 reported on January 2005 numbers ...
multiplescannotbe computedfor thesefirms, thereis less potential for bias with EBITDA multiples than with P/E ratios. This is es ...
One of the interesting by-products of switching from price-to-bookratiostovalue-to-bookratiosisthatweloseno firmsinthesample.Ino ...
holdings and little or no debt. For these firms, enterprise value-to-salesratiosarelowerthanprice-to-salesratios.The median EV/s ...
willbeginwith afirmvaluationmodel,where wediscount cashflowstothefirmatthecostofcapital,andexaminethe determinants of each multi ...
Ifwewanttospecifyenterprisevalueasamultipleofthis year’s operatingincome, theequations willbemodified to include a one-year grow ...
We can simplify this further, if we consolidate the reinvestment terms: Inotherwords,theEV/EBITDAmultipleisafunctionofthe same v ...
Dividing both sides of theequation by the book value of capital, we obtain the following: Wesubstitutethefollowingproxiesforretu ...
Theenterprisevalue-to-salesratio,in additiontoincreasing withgrowthand decreasingasthecostof capitalincreases will increase as t ...
ILLUSTRATION 9.2: Estimating Value Multiples for a Firm Assumethatyouarecomputingthemultiplesoffirmvalue for a firm with the fol ...
Wecan nowderive theenterprise value multiplesfor this firm,usingtheequationsdevelopedintheprevioussection. Letusbeginbyestimatin ...
Holdingallothervariablesconstant,increasingtheexpected growthrateinoperatingincomewillincreaseenterprisevalue multiples.Table9.4 ...
Rather than repeat that exercise, we will restate the conclusionsintermsof enterprisevaluemultiples.Holding othervariablesconsta ...
There are three implications for analysts using enterprise value multiples in relative valuation. The first is that companiesinr ...
investors, thus pushing up value. Table 9.6 examines the impactofchangingthereturnoncapitalwhilekeepingthe expected growth rate ...
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