Understanding Company Value
Understanding Company Value
As noted in our previous exploration cash flow is the touch stone of valuation methodologies, and business in general. EBITDA is widely used in practice as a convenient “proxy” for cash, and no journey into valuation would be complete without a deep dive into this concept. EBITDA will be explored regarding what it represents and […]
POC 4: EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization Read More »
Cost of Capital (COC) is a critical concept in understanding firm value, defined as that rate of return (return on investment) an investor must receive to entice the investor to commit capital to the proposed investment. Owners of companies must understand the important role cost of capital plays in transaction value determination. Owners focus on
POC 3: Cost of Capital Read More »
Valuation methodologies are rooted in the concept of discounted cash flow. Any excursion in finance and firm value would be incomplete without an exploration of this basic financial concept. All TVP concepts and methods are grounded in discounted cash flow (DCF). All the assets, liabilities, equity, and operations of a business firm are employed to
POC 2: Discounted Cash Flow & Firm Valuation Read More »
We start our journey with the concept of “Noise” because noise creates difficult problems with the objective and rigorous understanding of firm valuation and value creation. The problem manifests in the Noise/Insight Ratio Model. Statistically “noise” is unexplained variability within a data sample which degrades the quality and usefulness of any insight (signal) and the
POC 1: Noise – An Introduction Read More »