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EV/EBITDA and Acquisition valuation – Case Analysis for Dell Computer Why is EV/EBITDA suitable for acquisition valuation? EV/EBITDA is a relative valuation method suitable for acquisition valuation. That is because EV considers not only the equity value that the buyer should pay to the original owners but also the debt value […]
Understanding and practical interpretation of EV/EBITDA Knowing the difference between EV (Enterprise Value) and equity value is critically important for the use of EV/EBITDA. Suppose there are Flat A and B with the same price in London as shown in the figure below. Flat A and B with the same price (to […]
Evaluating Apple’s 36x PER by the PEG ratio Determining the stock price level with PER alone could lead to an error. Suppose that firms A and B have the same business and that both equity capital and profits are the same for the latest fiscal year. All other factors are similar, except […]
Valuation of Dyson share price by using PER Dyson is a British technology company founded in 1991 by James Dyson. It designs and manufactures home electric appliances such as vacuum cleaners, air purifiers, hairdryers, bladeless fans, heaters and lighting. It is a global company beyond the UK that has expanded to Asia, Europe, […]
PE Ratio and Private company stock valuation Definition of PE Ratio PE ratio (PER or Price Earnings ratio) is most often used in relative valuation. PE ratio multiple methods are used when an analyst evaluates a listed company’s share price, when a venture capital firm invests in a private company, and when […]
Market Approach Model, Selection of Comparable companies, and Calculation of Valuation Multiples The market approach model (relative valuation) is useful when estimating a private company’s market value. The way is to estimate the market value of a target company by referring to a market multiple of listed companies on the stock market similar […]
Types and uses of the Relative Valuation Multiples The relative valuation model is a method of indirectly estimating or judging the market value of a target company by referring to the market price of comparable companies that have similar properties to the target company. The numerator’s market price in the formula below can […]
The Basic of DCF Model (Discount Cash Flow): Present Value Calculation of Future Cash Flows It is essential to convert future cash flows into today’s value for business valuation. The value of $100 that companies create today is different from $100 expected in five years. Cash flows after five years may have […]
The methods for valuation of a company You can classify company valuation methods by several criteria. One of the criteria is to classify them based on whether you value the target company with its own financial status or its comparable companies’ market prices. The former is called the absolute valuation (or intrinsic valuation) […]
Company valuation for investment decision making Company valuation purpose Company valuation is an essential task to evaluate the current price level or to determine the initial market price. Let’s look at the formula below to see how important company valuation is. Return on investment = Pt / P0 P0: Purchase price of […]