Business Valuation

Question 1

Dividend Yield formula

Answer 1

Share price = Dividend/Yield

Yield comes from similar companies

Question 2

PE multiple formula (explain the different components)

Answer 2

Earnings * PE ratio

Earnings = PAT - pref dividend
PE ratio = proxy co

Question 3

Problems with dividend based approach

Answer 3

Estimating future dividends
Finding similar listed companies
Need to adjust downwards for lack of marketability

Question 4

Cash flow based valuation approach method

Answer 4

PV of cash flows to infinity discounted at WACC
Less MV of debt

Question 5

When must you adjust for non marketability and how much

Answer 5

Dividend and earnings based approaches (25%)

Question 6

EBITDA Multiple Valuation (enterprise value)

Answer 6

EBITDA * EBITDA multiple

Question 7

How to find MV of equity only from enterprise value

Answer 7

Deduct MV of debt, add cash

Question 8

EBITDA multiple calculation

Answer 8

Enterprise value/EBITDA

Question 9

Which EBITDA multiple should be used:

A) co you are valuing
B) relevant proxy co

Answer 9

B

Question 10

SVA analysis valuation method

Answer 10

Calc NPV using drivers and changes provided
Use DF normally and the same DF in last period to prior
Add PF in the final period
Find NPV
Deduct MV add Investments

Question 11

Problems with cash flow based valuation

Answer 11

Difficult to estimate future cash flows and discount rate

Question 12

Valuation of startups/tech companies

Answer 12

Discounted cash flow with different scenarios