08 Comparable Valuation
Why value a business or asset?
1. investment purposes
2. corporate actions
3. accounting policies
What does LTM stand for?
Last Twelve Months
Why is Total Liabilities not equal to Total Debt?
accounts payable (it's not technically a debt)
What formula do we use to calculate the Enterprise Value of a firm for comparable analysis purposes?
EV = common equity + prefered equity + debt - cash +noncontrolling interest - investments in affiliates
EV = cE + pE + D - C + NCI - IIA
What are the two methods to calculating EBITDA and when do you use them?
1. from revenue down to EBITDA
2. from net income up to EBITDA
Usually you'll start with the revenues and work your way down to EBITDA, however, some companies do not report their depreciation in their income statement. In this case, you should start with the net income and work your way up to EBITDA.
LTM = ...
... = YTD(2) + FYE - YTD(1)