Enterprise value (EV), a.k.a total enterprise value (TEV) or firm value (FV), is a metric to reflect the market value of a business and is often used as a more comprehensive alternative to EMC (equity market capitalization). It is a sum of claims by all claimants: creditors (secured and unsecured) and shareholders (preferred and common). Enterprise value is one of the fundamental metrics used in business valuation, financial analysis, accounting, portfolio analysis, and risk analysis.
EBITDA stands for Earning Before Interest, Taxes, Depreciations and Amortizations is one of the most important measures of a firm’s profitability. It is calculated as Net Income + Interest + Income Taxes + Depreciations + Amortizations. Or, EBITDA = EBIT + Depreciations + Amortizations.Continue reading What is EBITDA?
EBIT stands for Earning Before Interest and Taxes. EBIT (along with EBITDA) is one of the most important metrics to measure a firm’s profitability that includes incomes and expenses except interest expenses and income tax enspenses. In other words, EBIT = Net Income + Interest + Income Taxes.Continue reading What is EBIT?
Merger and Acquisition model is one of the most popular financial models that is usually used before and during mergers and acquisitions by merging the financial statements of the acquiring company and the acquired company to create consolidated financial statements.
Comparable Company Analysis (CCA) is one of the most popular financial models used to assess the value of a company using data from other similarly sized businesses in the same industry.Continue reading What is Comparable Company Analysis financial model?
Discounted Cash Flow is a valuation method used by investors to work out the value of an investment which can be either money, assets, companies, etc. based on its future cash flows. Discounted Cash Flow model is one of the most popular financial models that is widely used by business owners and investors.Continue reading What is Discounted Cash Flow (DCF) financial model?
Three Statement Financial model is one of the most popular financial models that is built based on the three financial statements below using data in the past and assumptions for the future to forecast or project the financial position of a company as a whole.Continue reading What is 3-statement financial model? How to build it
A firm’s Weighted Average Cost of Capital (WACC) represents a firm’s average after-tax cost of capital from all sources, including common shares, preferred shares, bonds, and other forms of debt where each source comes with a specific weight in the total.Continue reading What is WACC (Weighted Average Cost of Capital)? How to calculate
The internal rate of return (IRR) is a core component of capital budgeting and corporate finance used in financial analysis to estimate the profitability of potential investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.Continue reading What is IRR (Internal Rate of Return)?
Net present value (abbr. NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in DCF (Discounted Cash Flow) financial model to analyze the profitability of a projected investment or project. NPV is the result of calculations used to find the current value of a future stream of payments.Continue reading What is NPV (Net Present Value)? How to calculate it