Financial Valuation methods Flashcards Preview

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Flashcards in Financial Valuation methods Deck (11):
1

Zero growth model equation

Stock price = Dividend / required return

2

PEG ratio is a measure that shows what?

The effect of the earnings growth on a company's P/E.

Lower PEG ratio is attractive to investors

3

PEG ratio calculation

PEG = (Stock price today/ EPS) / Growth

4

Stock price and dividend grow at the same

Rate

5

A valuation technique that is used for start up companies or when earnings are very low is?

Price Sales ratio

6

High price earnings (P/E) ratio indicates

overvalue or high growth potentials

7

P/E ratio measures

The amount that investors are willing to pay and they anticipate more growth

8

What is the least acceptable method for determining accounting estimates of fixed assets or salvage value

Industry consensus since the fixed asset is unique to the company

9

When you have a limited intangible asset transactions and no reliable estimates of income/cash flows. What approach should you use

Cost approach

10

Methods for valuing tangible assets

CALM

Cost method

Market value method
- market value
- net realizable value

Appraisal method

Liquidation method

11

Methods for valuing intangible assets

Market approach

Income approach

Cost approach