Weekly Digests Archive

June 26, 2023: What's the deal with PE right now?

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Basic Financial Accounting: The 3 Financial Statements

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Discounted Cash Flow (DCF) Valuation + Questions

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Review: If you haven't yet, go back and read the article on WACC before starting this one Remember these formulas from the previous article: WACC = (% Equity * Cost of Equity) + (% Preferred Stock * Cost of Preferred Stock) + (% Debt * Cost of Debt * (1 - Tax Rate)) Cost of Equity = Risk-free Rate + Levered Beta * Market Risk Premium EV = EqV - Cash + Debt + Non-Controlling Interests + Preferred Stock EqV = EV + Cash - Debt - Non-Controlling Interests - Preferred Stock  Introduction to Valuation There are 2 main ways to value a company: Relative Valuation: using market historical data of similar companies or transactions to value a company Public Comps (Comparable Companies Analysis) Comparing the valuation multiples (such as PE ratio or EV/R ratio) of similar publicly traded companies to determine a valuation range Precedent Transaction Analysis Similar to Comps, but used more commonly in M&A scenarios. Also known as "M&A Comps" Analyzing recent transactions of
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