Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
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 ...
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 ...
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