Equity #27: Eq Valuation: Valuation Concepts Flashcards Preview

2018 Level 2 > Equity #27: Eq Valuation: Valuation Concepts > Flashcards

Flashcards in Equity #27: Eq Valuation: Valuation Concepts Deck (13):
1

Define valuation

valuation is process of determining the value of an asset

2

Going concern vs. liquidation value

going concern assumes the company will continue to operate and liquidation value does not assume this but assumes the company will continue to operate as a business

3

define fair market value

"price at which a hypothetical willing/informed seller would trade an asset to a willing/informed buyer"

4

Define investment value

value of stock to a particular buyer

5

What are Porter's 5 forces?

1. threat of new entrants 2. threat of substitutes 3. bargaining power of buyers 4. bargaining power of suppliers 5. rivalry among existing competitors

6

What are the 3 generic stages a comp employs to generate profits?

1. cost leadership (being lowest cost provider) 2. product differentiation 3. focus (gain comptetitive advantage)

7

Define absolute value model

estimates an assets intrinsic value without regard to the vlaue of other firms

8

types of absolute value models

Dividend discount models, asset-based models

9

Define relative valuation models

determine value of asset in relation to values of other assets

10

types of relative valuation models

EPS, P/E, etc

11

Qualify of earnings issues such as expense recognition and losses, reclassification of gains/non op income may be found where in financial statements?

may be found in footnotes and disclosures

12

DEFINE: sum-of-parts valuations

valuing individual components of a company and adding together

13

DEFINE: conglomerate discount

"refers to amt by which mkt price is lower than sum-of-the-parts value...[it's] an apparent price reduction applied to firms in multiple industries"