Question

In: Finance

Can the following terms be calculated from company's income statement and balance sheet? Enterprise value EBITDA...

Can the following terms be calculated from company's income statement and balance sheet?

Enterprise value

EBITDA

P/E Ratio

Current Market price

unlevered bata

Expected and actual return

If not, what specific information/values do i need for calculating these?

Solutions

Expert Solution

Enterprise Value is the amount of the money which is required to buy a company

Enterprise Value = Market Capitalization of shares + Value of prefferred stock + Debt - cash & cash equivalents

So Market Capitalization of shares is not available in balance sheet . The current market price has to be obtained from the marklet which is multiplied by no of shares outstanding which is available in the balance sheet . Value of prefferred stock & Debt - cash & cash equivalents are available in Balance sheet

EBITDA- Earning before Interest, Tax, Depreciation & Amortization. The same can be calculated from company Income statement directly

P/ E ratio is the current market price of the share of the company divided by the earnings per share. The current ,market price has to be obtained form the market and is not available in Balance sheet or Income statement.  Also eaning per share is not directly available It is calculated by Profit after tax / Total no of shares outstanding.

Current Market price is not available in Balance sheet & Income statement. The same has to be obtained from the market.

Unlevered beta is Beta after removing the debt compomnent hence the financial leverage. The same is not avaialble in balance sheet or income statement.

Expected return and actual return are both not available in balance sheet and income statement.

Expected return is the return which is expected to be earned over a period

Expected Return - Risk free rate + ( Market retrun - risk free rate ) * Beta

Actual return = ( Ending price - beginning price + dividends ) / beginning price.

jeff jeffy answered 1 year ago
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