Musings on Markets

FEBRUARY 27, 2023

Cash generating capacity : Debt payments are serviced with operating cash flows, and the more operating cash flows that firms generate, as a percent of their market value, the more that they can afford to borrow.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Musings on Markets

JANUARY 31, 2024

While private businesses are often described as profit maximizers, the truth is that if they should be value maximizers. In maturity, with debt entering the financing mix, net margins become good measures of profitability, and in decline, as earnings decline and capital expenditures ease, EBITDA margins dominate.

Equity 79

Equity Book Value Start-ups Corporate Finance 79

Musings on Markets

JANUARY 5, 2024

In my corporate finance class, I describe all decisions that companies make as falling into one of three buckets – investing decisions, financing decision and dividend decisions. Beta & Risk 1. Financing Flows 5. Standard Deviation in Equity/Firm Value 2. Book Value Multiples 3. Buybacks 2.

Dividends 98

Dividends Risk Premium Equity Book Value 98

Musings on Markets

JANUARY 6, 2023

By the same token, it is impossible to use a pricing metric (PE or EV to EBITDA), without a sense of the cross sectional distribution of that metric at the time. Check rules of thumb : Investing and corporate finance are full of rules of thumb, many of long standing. Price to Book 3. EV/EBIT and EV/EBITDA 4.

Risk Premium 52

Risk Premium Dividends EBITDA Start-ups 52

Brian DeChesare

SEPTEMBER 13, 2023

The company still pays interest on the full $1000 and must repay it upon maturity, but you can buy the issuance at a steep discount because there’s a significant chance of default (see: book value vs. market value vs. face value ). A sharply declining stock price does not necessarily mean a company is “distressed.”

Equity 88

Equity Banking EBITDA Start-ups 88