Musings on Markets

JULY 27, 2022

And no, you cannot add back stock based compensation and come up with an adjusted EBITDA to claim otherwise.) The effects of inflation show up first as higher risk free rates , across currencies, and next in higher risk premiums, with both equity risk premiums and default spreads rising.

Risk Premium 98

Risk Premium Start-ups Equity Marketability 98

Musings on Markets

JANUARY 5, 2024

Employee Count & Compensation I nvesting Principle Financing Principle Dividend Principle Hurdle Rate Project Returns Financing Mix Financing Type Cash Return Dividends/Buyback s 1. Beta & Risk 1. Equity Risk Premiums 2. Ratings & Spreads 2. Tax rates 4. EBIT & EBITDA multiple s 5.

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

Musings on Markets

JANUARY 26, 2023

Tesla's rise is summarized in the graph below, where we look at the company's revenues and earnings over time, with earnings measured in gross and operating terms, and EBITDA capturing operating cash flows: 2022 numbers updated to reflect 4th quarter earnings call on 1/25/23 Between 2010 and 2020, Tesla grew revenues from $117 million to $31.5

Start-ups 98

Start-ups Marketability Risk Premium Equity 98

Musings on Markets

FEBRUARY 15, 2023

One is to compute the taxes you would have paid on operating income, if it had been fully taxable, to get after-tax operating income and margin , and the other is to add back depreciation to operating income to get EBITDA and EBITDA margin.

Start-ups 52

Start-ups Equity Risk Premium Risk-free Rate 52

Brian DeChesare

MAY 3, 2023

In our forecast, Cash rises too much, and Debt / EBITDA goes from 5.0x Dividend Discount Model, Part 4: Present Value of Terminal Value and Dividends Since the Dividend Discount Model is based on Equity Value, not Enterprise Value, the Discount Rate is the Cost of Equity: Risk-Free Rate + Equity Risk Premium * Levered Beta.

Dividends 64

Dividends Terminal Value Enterprise Value Equity 64

Valutico

OCTOBER 20, 2022

Practitioners assume the business is sold as a multiple of some financial metric like EBITDA, based on what they can see today for other businesses that were sold, and what these comparable trading multiples are. . Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Cp = Cost of Equity Premium.

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52