{"id":5078,"date":"2011-06-01T14:35:39","date_gmt":"2011-06-01T09:05:39","guid":{"rendered":"index.php\/?p=5078"},"modified":"2011-06-01T16:20:12","modified_gmt":"2011-06-01T10:50:12","slug":"enterprise-valuation","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2011\/06\/01\/enterprise-valuation\/","title":{"rendered":"Enterprise Valuation"},"content":{"rendered":"<p>We discussed some key equity metrics in our <a href=\"http:\/\/stockviz.biz\/index.php\/2011\/05\/29\/stock-valuation-metrics\/\" target=\"_blank\">previous post<\/a>. Multiples like PE, PB, etc. help you focus on the equity part of the capital structure while valuing a company. However, in order to get a true picture of the financial health of the company, an investor needs to focus on the Enterprise Multiples as well. Some of the key enterprise multiples are:<\/p>\n<ul>\n<li>Revenue: A business has to finally <em>sell<\/em> something. The revenue number gives an idea about scale and is more or less independent of accounting treatment.<\/li>\n<li>EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Give an approximate measure of a company&#8217;s operating cash flow. By ignoring capital investments and taxes, it allows investors to do apples-to-apples comparison between companies in the same industry.<\/li>\n<li>OpFCF (Operating Free Cash Flow): It is a modified version of EBITDA that includes the effects of CapEx (Capital Expenditure) into the calculation. It is cash-based, forward looking and unaffected by accounting.<\/li>\n<\/ul>\n<p>For readers who are interested in a thorough treatment of valuation metrics, a good primer from UBS is can be found <a title=\"UBS Primer\" href=\"http:\/\/www.scribd.com\/fullscreen\/50425904?access_key=key-c9a35x6n1znw16ph4rc\">here<\/a>. Happy investing!<\/p>\n<p>[scribd id=50425904 key=key-c9a35x6n1znw16ph4rc mode=list]<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We discussed some key equity metrics in our previous post. Multiples like PE, PB, etc. help you focus on the equity part of the capital structure while valuing a company. However, in order to get a true picture of the financial health of the company, an investor needs to focus on the Enterprise Multiples as &hellip; <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[28],"class_list":["post-5078","post","type-post","status-publish","format-standard","hentry","category-your-money","tag-basic","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/5078","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=5078"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/5078\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=5078"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=5078"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=5078"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}