Musings on Markets

JANUARY 5, 2024

EBIT & EBITDA multiple s 5. Working capital needs Thus, I compute pricing multiples based on revenues (EV to Sales, Price to Sales), earnings (PE, PEG), book value (PBV, EV to Invested Capital) or cash flow proxies (EV to EBITDA). Long term Reinvestment (Cap Ex & Acquisitons) 4. Be patient.

Dividends

Musings on Markets

FEBRUARY 15, 2023

One is to compute the taxes you would have paid on operating income, if it had been fully taxable, to get after-tax operating income and margin , and the other is to add back depreciation to operating income to get EBITDA and EBITDA margin.

Start-ups

Musings on Markets

JANUARY 26, 2023

Tesla's rise is summarized in the graph below, where we look at the company's revenues and earnings over time, with earnings measured in gross and operating terms, and EBITDA capturing operating cash flows: 2022 numbers updated to reflect 4th quarter earnings call on 1/25/23 Between 2010 and 2020, Tesla grew revenues from $117 million to $31.5

Start-ups

Musings on Markets

JULY 27, 2022

And no, you cannot add back stock based compensation and come up with an adjusted EBITDA to claim otherwise.) The effects of inflation show up first as higher risk free rates , across currencies, and next in higher risk premiums, with both equity risk premiums and default spreads rising.

Risk Premium

Musings on Markets

JANUARY 28, 2024

In the last table, I look at the intrinsic risk measures, broken down by company age: Not surprisingly, there are more money losing young companies than older ones, and these young companies also have more volatile earnings.

Risk Premium

Musings on Markets

FEBRUARY 6, 2025

I am no expert on exchange rates, but learning to deal with different currencies in valuation is a prerequisite to valuing companies. and an augmented premium for countries that do not have Aaa ratings, with the additional country risk premium determined by local currency sovereign ratings.

Risk Premium