Equity Valuation【Reading 43】Sample
An analyst is examining three companies. Given the information below, which of them is most likely to be a private firm?
Firm | Number of Years in Operation | Market Capitalization | Required Return for Common Stock | A | 12 years | $1,324.8 million | 14.8% | B | 4 years | $1,313.9 million | 18.3% | C | 19 years | $2,231.0 million | 16.4% |
The firm most likely to be a private firm is Firm B. Compared to public firms, private firms are less mature (4 years for Firm B), smaller (market cap of B is $1,313.9 million), and have higher required returns (required return for B is 18.3%). |