Musings on Markets

FEBRUARY 15, 2023

It is to remedy this defect that analysts scale profits to invested capital, with equity and capital variants: In the equity version, you divide net income by book equity to estimate a return on equity, a measure of what equity investors are generating on the capital they have invested in a company.

Equity 52

Equity Start-ups Risk Premium Risk-free Rate 52

Musings on Markets

FEBRUARY 27, 2023

To fund the business, you can either use borrowed money (debt) or owner's funds (equity), and while both are sources of capital, they represent different claims on the business. Even government-owned businesses fall under its umbrella, with the key difference being that equity is provided by the taxpayers.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Musings on Markets

JANUARY 9, 2021

The second was that, starting mid-year in 2020, equity markets and the real economy moved in different directions, with the former rising on the expectations a post-virus future, and the latter languishing, as most of the world continued to operate with significant constraints.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

JANUARY 5, 2024

Beta & Risk 1. Return on Equity 1. Equity Risk Premiums 2. Costs of equity & capital 4. Valuation Pricing Growth & Reinvestment Profitability Risk Multiple s 1. Valuation Pricing Growth & Reinvestment Profitability Risk Multiple s 1. Costs of equity & capital 1.

Dividends 98

Dividends Risk Premium Equity Book Value 98

Musings on Markets

JULY 17, 2023

In my second data update post from the start of this year , I looked at US equities in 2022, with the S&P 500 down almost 20% during the year and the NASDAQ, overweighted in technology, feeling even more pain, down about a third, during the year. trillion below their values from the start of 2022. that was lost last year.

Marketability 95

Marketability Risk Premium Start-ups Treasury 95

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 79

Equity Book Value Start-ups Corporate Finance 79

Musings on Markets

JANUARY 6, 2023

For example, I have seen it asserted that a stock that trades at less than book value is cheap or that a stock that trades at more than twenty times EBITDA is expensive. I do report on a few market-wide data items especially on risk premiums for both equity and debt. Cost of Equity 1. Price to Book 3.

Risk Premium 52

Risk Premium Dividends EBITDA Start-ups 52