08 - Equity Valuation

  1. Book Value
    The net worth of common equity according to a firm's balance sheet.
  2. Liquidation Value
    Net amount that can be realised by selling the assets of a firm and paying off the debt.
  3. Replacement Cost
    Cost to replace a firm's assets.
  4. Tobin's q
    Ratio of market value of the firm to replacement cost.
  5. Intrinsic Value of Share
    The present value of a firm's expected future net cash flows discounted by the required rate of return.
  6. Market Capitalisation Rate
    The market-consensus estimate of the appropriate discount rate for a firm's cash flows.
  7. Dividend Discount Model (DDM)
    A formula for the intrinsic value of a firm equal to the present value of all expected future dividends.
  8. Constant-growth DDM
    A form of the dividend discount model that assumes dividends will grow at a constant rate
  9. Dividend Payout Ratio
    Percentage of earnings paid out as dividends.
  10. Plowback Ratio (Earnings Retention Ratio)
    The proportion of the firm's earnings that is reinvested in the business (not paid out as dividends).
  11. Present Value of Growth Opportunities (PVGO)
    Net present value of a firm's future investments.
  12. Two-stage DDM
    Dividend discount model in which dividend growth is assumed to level off only at some future date.
  13. Price Earnings Multiple
    The ratio of a stock's price to its earnings per share.
  14. PEG Ratio
    Ratio of P/E multiple to earnings growth rate.
  15. Earnings Management
    The practice of using flexibility in accounting rules to improve the apparent profitability of the firm.
Card Set
08 - Equity Valuation
221 - Equity Valuation