Finance Studying Terms

EBITA

Earnings Before Interest, Taxes, Depreciation, and Amortization

EV

Enterprise Value

EV/EBITDA Multiple

valuation multiple used to determine the fair market value of a company

TTM Trailing 12 months

0. The sum of the prior four quarters of a company’s financial performance

LTM or Twelve Trailing Moths

Last Twelve Months

NTM

Next twelve months

EBIT or operating income- Size

Earnings Before Interest and Taxes, found by deducting all operating expenses (production and non-production costs) from sales revenue

Equity Value

the enterprise value plus all cash and cash equivalents, short and long-term investments, and less all short-term debt, long-term debt and minority interests

Premiums Paid

the going rate for something, because of some perceived added value or due to supply and demand imbalances

Comparable Companies Analysis Steps

1. Select the universe of comparable companies

2. Locate the necessary financial information

3. Spread key statistics, Rations, and Trading multiples

4. Benchmark the comparable companies

5. Determine Valuation

Spreading

performing calculations in a spreadsheet program

Gross Profit- profitability

the difference between a company's total revenue and its total cost of goods sold

Net income- profitability

the amount an individual or business makes after deducting costs, allowances and taxes.

Net profit margin- profitability

= Net Profit ⁄ Total revenue x 100

Dividend Yield-ROI

= annual dividends per share/current share price

ROA (Return on assets)- ROI

=net income/total assets

ROE (Return on Equity)- ROI

=net income/shareholder’s equity

ROIC (return on investment capital)- ROI

=(net income-dividends)/ Total Capital

Leverage Ratios

Coverage Rations- Credit profile

=Net operating income/ debt service

Equity Value

= share price x Fully diluted shares outstanding