Musings on Markets

JANUARY 5, 2024

Standard Deviation in Equity/Firm Value 2. Book Value Multiples 3. Working capital needs Thus, I compute pricing multiples based on revenues (EV to Sales, Price to Sales), earnings (PE, PEG), book value (PBV, EV to Invested Capital) or cash flow proxies (EV to EBITDA). Fundamenal Growth in Operating Earnings 3.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 80

Equity Book Value Start-ups Corporate Finance 80

ThomsonReuters

JUNE 15, 2021

Goodwill is an accounting term for the figure that is recorded on the balance sheet after subtracting the book value of a business from the higher price that was paid for it. Additionally, private companies have options in a few areas—most notably use of IBR or risk-free rate–that public companies do not,” she said.

Risk-free Rate 64

Risk-free Rate Equity Start-ups Book Value 64

Musings on Markets

FEBRUARY 15, 2023

Both accounting returns are computed based upon book value, not because we have suddenly developed trust in accounting, but because the objective is to estimate what investors have earned on what they originally invested in a company, rather than an updated or a marked-to market value.

Start-ups 52

Start-ups Equity Risk Premium Risk-free Rate 52

Musings on Markets

FEBRUARY 6, 2025

I am no expert on exchange rates, but learning to deal with different currencies in valuation is a prerequisite to valuing companies.

Risk Premium 67

Risk Premium Start-ups Enterprise Value Equity 67