Overview
- Use market multiples for valuation in the finance industry
- Interpret the relationship between the market value of an enterprise and its fundamental performance
- Triangulate the intrinsic value of a company by comparing valuation metrics in the form of simple ratios
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Table of contents (6 chapters)
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About this book
Understand how to use equity market metrics such as the price/earnings ratio (and other multiples) to value public and private enterprises. This essential book gives you the tools you need to identify and qualify investments and assess business strategy and performance.
Author George Calhoun, Founding Director of the Quantitative Finance Program at Stevens Institute of Technology, shows you how to use metrics to appraise mergers, acquisitions, and spin-offs. You will be able to shed light on financial market conditions, benchmark fair value assessments, and check and calibrate complex cash flow models.
Market multiples share a peculiar construction: they are based on an explicit apples-to-oranges comparison of market prices with accounting fundamentals, combining data derived from two very different sources and methodologies. This creates ambiguities in interpretation that can complicate the application of these metrics for the many purposes.Multiples are thus easy to construct, but they can be difficult to interpret. The meanings of certain multiples have evolved over time, and new-and-improved versions have been introduced. The field is becoming more complex and the question of which metrics perform best can be a source of controversy.
What You Will Learn
- Know the definitions, interpretations, and applications of all major market ratios, including: price/earnings (trailing and forward), cyclically adjusted price/earnings, cash-adjusted price/earnings, EV/EBITDA, price/sales, dividend yield, and many more
- Examine the factors that drive the values of ratios from firm level (such as earnings growth, leverage, and governance) to market level (such as inflation, tax and fiscal policy, monetary policy, and international characteristics)
- Apply metrics in: investment analysis, index construction, factor models, sum-of-the-parts analysis of corporate structures, and detection of asset bubbles
Who This Book Is For
Professionals at all levels working in the finance industry, especially in fields related to investment management, trading, and investment banking who are involved with valuation and assessing and advising on corporate transactions and interpreting market trends, and university students in finance-related programs at the undergraduate and graduate levels
Authors and Affiliations
About the author
Bibliographic Information
Book Title: Price and Value
Book Subtitle: A Guide to Equity Market Valuation Metrics
Authors: George Calhoun
DOI: https://doi.org/10.1007/978-1-4842-5552-0
Publisher: Apress Berkeley, CA
eBook Packages: Economics and Finance, Apress Access Books, Economics and Finance (R0)
Copyright Information: George Calhoun 2020
Softcover ISBN: 978-1-4842-5551-3Published: 04 February 2020
eBook ISBN: 978-1-4842-5552-0Published: 03 February 2020
Edition Number: 1
Number of Pages: XXXI, 391
Number of Illustrations: 4 b/w illustrations, 181 illustrations in colour
Topics: Financial Services, Business Finance