Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
Aswithprice-to-bookratios,therelationshipisclear.When excessreturnsarepositive(i.e.,thereturnoncapitalexceeds thecost of capital ...
ratefixed,theenterprisevaluemultipleswillchangeasshown inTable 9.7. TABLE 9.7 After-Tax Operating Margin and Enterprise Value Mu ...
When comparing enterprise value to sales ratios across companies, we should be cognizant of differences in marketingstrategiesan ...
As the taxrate is increased, all enterprise value multiples decrease,butthedifferencebetweenthepretaxmultiplesEV/ EBITDAandEV/EB ...
APPLICATIONS OF VALUE MULTIPLES Now that wehaveidentified thevariables that affect each multipleandhaveasenseofhowchangesinthese ...
a firmthattradesata lowenterprise value-to-book capital ratio; if the returnon capital is negative orvery low, we wouldconsidert ...
Firmswithhighandpositiveexcessreturnswilltendtohave high value-to-book ratios, whereas firms with low and negative excess return ...
powerful and versatile way of controlling for differences acrosscompanies.Notonlycantherebeasmanyindependent variables as the da ...
The enterprise value-to-EBITDA multiples vary widely acrossthesefirms,andmanyofthesefirmshavenegativenet capitalexpenditures,par ...
At 5.6 times EBITDA, the firm is overvalued. ILLUSTRATION 9.4: Comparing EV/Capital Ratios Inthelastcolumn,wereporttheafter-taxr ...
value-to-salesratioof2.10whileearningareturnoncapital of 15.63%. By the same token, L’Oreal and Wella look overvalued,sincetheyt ...
Asafinaltest,weregresstheenterprisevalue-to-capitalratio against the after-tax operating margin to complete the analysis: In thi ...
Basedonthesepredictions,Sarantisisundervaluedbyabout 55%(withanEV/capitalratioof2.22)andChristianDiorby about 43% (with an EV/ca ...
Foramorecompleteexaminationoftherelationshipbetween EV-to-sales ratios and after-tax operating margins, we regressed theformerag ...
Yule Catto carries more debt thanthe typical firm in the sector with an interest coverage ratio of 2.12, and after adjustingfort ...
TurningtoEV/EBITDAmultiples,weobtainthefollowing outputfromtheregressionagainstthetaxrate,reinvestment rate,returnoncapital,ande ...
The regression yields results similar to those obtained for price-to-bookratios,andtheR-squarediscomparableat57.3 percent. The r ...
over the next five years was a consensus estimate from analysts,andthereinvestmentratewasalsocomputedusing numbersfromthemostrec ...
Itisalsoeasiertoestimatemultiplesofrevenuesafter growth rates have leveled off and the firm’s risk profileisstable.Forbothyoung ...
Inthethirdapproach,we canadjustthemultiple offuture revenuesfordifferencesinoperatingmargin,growth,andrisk between thefirm being ...
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