Valuation · 5 questions

Valuation 1

Enterprise value, multiples, and when a DCF is the wrong tool.

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  1. 1 Same business, 10x vs 15xA and B have the same business and the same plants. A trades at 10x EV/EBITDA, B at 15x. Why? AnalystAssociate Pick the drivers
  2. 2 From equity value to EVYou know a company’s equity value (its market capitalisation). Which items do you add to get to its enterprise value? InternAnalyst Pick the drivers Plus
  3. 3 Owned vs rented storesTwo identical retailers have the same enterprise value. A owns its stores and depreciates them; B rents the same stores, and its rent equals A’s depreciation. The rent is an ordinary operating cost, not a capitalised lease. Associate Pick the drivers Plus
  4. 4 When not to use a DCFWhen is a standard DCF the wrong tool to value a company? InternAnalyst Pick the drivers Plus
  5. 5 Challenging a DCFThe other side’s adviser shows you a DCF in which 85% of the value comes from the terminal value. What do you challenge? AssociateVP & above Pick the drivers Plus