Beta (β), meaning in stocks and investment, also known as risk coefficent, is a measure of a stock’s volatility in relation to the overall market and can be used to measure a stock’s level of risk in the stock market.Continue reading What is stock / investment Beta (β) coefficient? How to calculate Beta
EMC, usually referred to as market capitalization or market cap, is the total value of a publicly traded company’s outstanding common shares owned by stockholders. It is calculated by multiplying the price of a stock by its total number of outstanding shares. For example, a company with 20 million shares selling at $50 a share would have a market cap of $1 billion.Continue reading What is Equity Market Capitalization (EMC)?
For business owners and financial managers, cash flow management is crucial to the survival of the business and it is associated with that business throughout its operation, so the role of cash flow management is very important. in the business activities of the enterprise. So what is cash flow? What is net cash flow, and is there any method to manage cash flow in the business effectively? Let’s find out.Continue reading What is Cash Flow? Cash Flow Management
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.
Enterprise Value (EV) is a measure of a company’s total value, including both its debt and equity. It represents the theoretical takeover price for a company, including the purchase price of all its outstanding stock and debt. This measure is used to evaluate a company’s overall value and compare it to other companies within the same industry.
EV is calculated as the sum of a company’s market capitalization, debt, minority interests, and preferred shares, minus its cash and cash equivalents. Market capitalization is the total value of a company’s outstanding shares of stock, while debt represents the company’s outstanding liabilities. Minority interests refer to the portion of the company owned by outside investors, while preferred shares represent a type of security that has priority over common stock in terms of dividends and liquidation.
EV is useful in evaluating companies because it takes into account both debt and equity, providing a more comprehensive picture of the company’s overall value. For example, if a company has a high market capitalization but a large amount of debt, its EV would reflect this and may be lower than a company with a lower market capitalization but less debt.
In addition, EV can be used to compare companies of different sizes and structures, as it adjusts for factors such as debt levels, cash holdings, and minority interests. This makes it a useful tool for investors and analysts who are evaluating companies for investment purposes.
In conclusion, Enterprise Value is a comprehensive measure of a company’s overall value that takes into account both its debt and equity, and provides a more accurate picture of the company’s financial position than market capitalization alone.
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?
A Merger and Acquisition (M&A) financial model is one of the most popular financial models that is usually used to evaluate the financial aspects of a merger or acquisition transaction 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.Continue reading What is Merger and Acquisition (M&A) Financial Model?
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?
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