Valuation Metrics
Chapters in this video
- 0:00 Equity and enterprise value: Val the analyst
- 1:16 The EV cash trap and net debt rearrangement
- 1:36 Equity multiples toolkit: P/E, PEG, EV/EBITDA, and more
- 2:34 Stated versus tangible book, LTM versus forward, and CAGR
- 4:43 DCF and WACC deep dive: Ingrid the issuer
- 5:26 Debt-only tax shield and the NPV-IRR decision rules
- 6:14 Terminal value methods and the dividend discount model trap
- 7:47 Accretion and dilution math: Blake the banker
- 8:49 Rapid-fire exam recap
What this video covers
- How to build enterprise value (EV) from market capitalization, and why cash is subtracted (not equity value)
- The difference between stated and tangible price-to-book (P/B), and which one is the tougher test for acquisitive companies
- Why last 12 months (LTM) multiples are preferred over forward multiples for comparable company analysis
- How weighted average cost of capital (WACC) is constructed, and why the tax shield (1 minus tax rate) applies to debt only, never equity
- What net present value (NPV) and internal rate of return (IRR) measure, and why IRR must exceed WACC to accept a project
- When to use the Gordon growth perpetuity method versus the exit multiple method for terminal value in a discounted cash flow (DCF)
- The price-to-earnings (P/E) rule of thumb for accretion/dilution in all-stock deals: a target P/E lower than the acquirer P/E means accretive EPS
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