Equity Valuation Flashcards
Definition of justified leading P/E and justified trailing P/E
Explanations for conglomerate discounts
1 - internal capital inefficiency - capital allocation not based in sound decisions
2 - endogenous (internal factors) - ex. Acquisitions to hide poor operating performance
3 - research measurement error
Five elements of porter
Difference btw absolute and relative valuation
Which cases valuation on dividends and, FCF and residual income are most appropriate?
How to calculate the present value of growth (PVGO)
How to calculate the sustainable growth rate?
Formula DuPont
PRAT
Calculate expected return with the Gordon growth model
Molodovsky effect
What are the 4 forms to calculate CF for P/CF?
1- Earnings + non cash charges (CF) = NI + depr. + amort.
2- Adjusted CF (adjusted CFO)
3- FCFE = CFO + CFI + net borrowing
4- Ebitda
Formula for justified P/E, P/B, P/S
Differences btw CAPM, expanded CAPM and build-up method
Expanded CAPM + small stock premium + company specific premium (not to be used when there is a comparable)
Build up method replaces beta times ERP for ERP + industry risk premium + the expanded CAPM components.
H-model formula
Começa com Gordon e depois medida do triângulo.
When to use FCFF or FCFE?
FCFE used in control perspective. Ability to change dividend policy (DDM used for minority in publicly traded firms)
FCFF and FCFE from NI
FCFF and FCFE from CFO
FCFF from EBIT
FCFF from ebitda
Types of noncash charges
Calculate WC from BS
Asset positivo
Liability negativo
N+1 - N»_space;> resultado entra negativo (investimento)
Calculate FCFE when there is constant capital structure
Justified DY
Methods of calculating residual income
