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. To the retort from some bankers that you can liquidate the assets and recover your loans, I have two responses.

Equity 52

Equity EBITDA Start-ups Net Debt 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

Musings on Markets

FEBRUARY 27, 2022

To make comparisons, profits are scaled to common metrics, with revenues and book value of investment being the most common scalar. The Value of Growth As investor tastes have shifted from earnings power to growth, there has been a tendency to put growth on a pedestal, and view it as an unalloyed good, but it is not.

Start-ups 80

Start-ups Equity Book Value Marketability 80

Brian DeChesare

JUNE 1, 2022

It is 100% possible to use standard valuation multiples, such as P / E and TEV / EBITDA , to value power/utility companies, and you’ll see many examples in the Fairness Opinions below. Books: Fisher Investments on Utilities , Principles of Utility Corporate Finance , and a metric ton of books on renewables.

Banking 96

Banking Equity Book Value Capital Structure 96

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. Financing Flows 5. Standard Deviation in Equity/Firm Value 2. Book Value Multiples 3. EBIT & EBITDA multiple s 5.

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. EV/EBIT and EV/EBITDA 4. Cost of Capital 3.

Risk Premium 52

Risk Premium Dividends EBITDA Start-ups 52