This page lists recent articles related to corporate finance on this website.
The risk of bankruptcy is real. This maybe truer for some companies over other companies – those with higher debt levels are considered riskier than those with less debt. Nevertheless, how do you account for the risk of bankruptcy? How do you account for this additional risk?
We address this question: “How can you feature the risk of bankruptcy in your DCF model?
Apples to apples and oranges to oranges. Different types of cash flows need to be discounted with different types of discount rates. How do you decide which discount rate is the appropriate discount rate for the different types of cash flows you will encounter?
We address this question here: “Is There an appropriate discount rate you must use?
The APV method conceptually is well accepted. The primary benefit of the APV method is that it separates the value derived from operations from the value derived from other sources such as tax shields, ancillary revenues/cash flows. However, there are some concerns.
We address the question “What are the drawbacks of the adjusted present value (APV) (if any)” here.
The DCF approach to valuation and the multiples method of valuation are common. Where does the APV method come in? What are the advantages of the adjusted present value (APV) method of valuation? How is it different?
We address this question on this webpage. “How is the adjusted present value (APV) method different from your standard DCF -WACC method?”
The DCF approach to valuation and the multiples method of valuation are common. Where does the APV method come in? What are the advantages of the adjusted present value (APV) method of valuation?
We address this question on this webpage. “Why would you consider the adjusted present value (APV) method of valuation?”
There are a large number of multiples you can choose from to do a multiples-based valuation. Examples include PE or Price Earning multiple, EV/Cash flow, EV/EBITDA, EV/EBIT, EV/Eyeballs, PEG, Value/Barrel, EV/Sales, EV/EBIT, EV/sales, etc. What factors help you decide on the multiples you pick? Which ones do you use? Which ones should you avoid? Are some multiples better than others?
We discussed elsewhere that multiples closer to cash flows should be preferred to other multiples because cash flows drive valuation. However, how do you select the numerator? Show you be considering enterprise values or equity of something else?
We address this question: Why are enterprise value multiples considered better than equity multiples?
There are a large number of multiples you can choose from to do a multiples-based valuation. Examples include EV/Cash flow, EV/EBITDA, EV/EBIT, EV/Eyeballs, Value/Barrel, EV/Sales, EV/EBIT, EV/sales, etc. What factors help you decide on the multiples you pick? Which ones do you use? Which ones should you avoid? Are some multiples better than others?
We address this question here: “What factors help you decide which multiple to use in multiples-based valuations?”
There must be a connection between dividend payment and the beta. Have you noticed if there is a connection between dividend payment and the beta? If yes, in what direction is the relationship? Very interesting question. Are you sure?
We address this question here today. “Does dividend payment impact the beta? If yes, how?”
What does beta indicate? How is it connected with a company’s valuation? Does it cause a change in valuation or it is visa-versa?
We address this question here today: “Does the beta of a company provide any indication of the company’s valuation?”
What is Equity Beta? A simple question but one that you need to be clear on in PE or IB or any finance interview for that matter.