Valuation & Analysis
Ratios and models used to argue that a security is cheap, expensive, or fairly priced.
14 terms in this unit.
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Book Value
Assets minus liabilities - the accounting value of equity.
Free Cash Flow
Operating cash flow minus capital expenditures.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
Return on Equity (ROE)
Net income divided by shareholders' equity.
Debt-to-Equity Ratio
Total liabilities divided by shareholders' equity.
Discounted Cash Flow (DCF)
Valuing an asset as the present value of its future cash flows.
Net Present Value (NPV)
Present value of inflows minus the initial cost.
Internal Rate of Return (IRR)
The discount rate at which an investment's NPV equals zero.
Time Value of Money
A dollar today is worth more than a dollar tomorrow.