标题: Reading 42: Market-Based Valuation: Price and Enterprise Val [打印本页]
作者: 土豆妮 时间: 2010-4-19 16:11 标题: [2010]Session 12-Reading 42: Market-Based Valuation: Price and Enterprise Val
Session 12: Equity Investments: Valuation Models
Reading 42: Market-Based Valuation: Price and Enterprise Value Multiples
LOS q: Discuss alternative definitions of cash flow used in price and enterprise value multiples (including enterprise value to earnings before interest, taxes, depreciation, and amortization EV/EBITDA), and explain the limitations of each.
Which of the following measures of cash flow is most closely linked with valuation theory?
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A) |
Free cash flow to equity (FCFE). | |
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B) |
Cash flow from operations (CFO). | |
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C) |
Earnings before interest, taxes, depreciation, and amortization (EBITDA). | |
FCFE is most strongly linked to valuation theory. Both remaining proxies are in need of significant adjustment to accurately measure cash flow in valuation.
作者: 土豆妮 时间: 2010-4-19 16:11
If cash flow from operations (CFO) embeds financing-related flows, it should be adjusted by:
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A) |
subtracting (net interest outflow) × (1 - tax rate). | |
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B) |
adding (net interest outflow) × (1 - tax rate). | |
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C) |
subtracting capital expenditures. | |
Cash flow from operations CFO should be adjusted to CFO + (net cash interest outflow) × (1 – tax rate), if CFO embeds financing-related flows.
作者: 土豆妮 时间: 2010-4-19 16:12
Earnings before interest, taxes, depreciation, and amortization (EBITDA) is best suited as a measure of:
EBITDA is a pre-tax, pre-interest measure, which represents a flow to both equity and debt. Thus, it is better suited as an indicator of total company value than just equity value.
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