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In: Finance
As shown in the valuation based on the EV multiples model, the estimated intrinsic value of...
As shown in the valuation based on the EV multiples model, the estimated intrinsic value of Twitter based on EV/EBITDA multiple vs. EV/Sales multiple are substantially different. What might explain such a difference?
Solutions
Expert Solution
The multiple method that is used in valuation is based on the average of the industry similar companies. Here we are using EV/EBITDA and EV/Sales multiple to value a company. Here by using the EBITDA and sales we multiply with the respective multiple to get the Enterprise value (EV). The reason why the values of EV can differ is EBITDA and sales of the companies can differ significantly and so will the average multiple in the industry which is being used by the analyst to calculate the EV or enterprise value. The reason why EV can differ also is because sales of the companies are larger and it is the first item in the income statement whereas the EBITDA, earning before interest, tax, depreciation and amortization is usually small. The sales of large corporations will vary significantly but the variation in EBITDA is not much so the average multiple will be different causing the enterprise values to be different.
jeff jeffy answered 2 years agoRelated Solutions
As shown in the valuation based on the EV multiples model, the estimated intrinsic value of...
As shown in the valuation based on the EV multiples model, the
estimated intrinsic value of Twitter based on EV/EBITDA multiple
vs. EV/Sales multiple are substantially different. What might
explain such a difference?
Short answer question.
What are the primary differences among the CF valuation model, asset-based valuation model, and multiples valuation...
What are the primary differences among the CF valuation model,
asset-based valuation model, and multiples valuation model?
What are the primary differences among the CF valuation model, asset-based valuation model, and multiples valuation...
What are the primary differences among the CF valuation model,
asset-based valuation model, and multiples valuation model?
a) Set out and explain three cash flow based valuation techniques for determining the intrinsic value...
a) Set out and explain three cash flow based valuation
techniques for determining the intrinsic value of a company’s
equity.
b) Set out and explain two abnormal income based valuation
techniques for determining the intrinsic value of a company’s
equity.
c) Provide a balanced discussion of the theoretical merits and
weaknesses of each of the two types of model described in parts (a)
and (b).
d) Provide a summary of the empirical evidence relating to the
performance of each type...
b) Set out and explain two abnormal income based valuation techniques for determining the intrinsic value...
b) Set out and explain two abnormal income based valuation
techniques for determining the intrinsic value of a company’s
equity.
The methods of valuation are the following, market multiples of peer firms, book value, liquidation value,...
The methods of valuation are the following, market multiples of
peer firms, book value, liquidation value, replacement cost, market
value, and comparable transaction multiples. After looking through
valuation techniques, which one do you think is the most effective
and why? (You can research other valuation techniques outside of
the ones listed in the notes as well). (200 words)
The methods of valuation are the following, market multiples of peer firms, book value, liquidation value,...
The methods of valuation are the following, market multiples of
peer firms, book value, liquidation value, replacement cost, market
value, and comparable transaction multiples. After looking through
valuation techniques, which one do you think is the most effective
and why? (You can research other valuation techniques outside of
the ones listed in the notes as well). (200 words)
The Walt Disney company’s intrinsic value for 2018 using the discount valuation techniques Calculate the Intrinsic...
The Walt Disney company’s intrinsic value for 2018 using the
discount valuation techniques
Calculate the Intrinsic Value of The Walt Disney Company:
You will use the Discounted Cash Flow (DCF) valuation model to
calculate the intrinsic value of the Walt Disney company. This
model involves three primary steps: i) calculating the company's
cost of capital, ii) calculating the free cash flows to the firm,
and ii) applying the time-value-of-money concept to discount your
projected cash flow values back to the...
1.) Explain company valuation using market multiples based on balance sheet measures. 2.) Explain company valuation...
1.) Explain company valuation using market multiples based on
balance sheet measures.
2.) Explain company valuation using market multiples based on
income statement measures.
3.) Identify comparable companies for use in company valuation
with market multiples.
4.) Interpret and reverse engineer market multiples to assess
the reliability of market expectations.
Explain briefly the limitations of an approach based on the use of multiples to value a...
Explain briefly the limitations of an approach based on the use
of multiples to value a firm.
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