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08 - Equity Valuation
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Book Value
The net worth of common equity according to a firm's balance sheet.
Liquidation Value
Net amount that can be realised by selling the assets of a firm and paying off the debt.
Replacement Cost
Cost to replace a firm's assets.
Tobin's
q
Ratio of market value of the firm to replacement cost.
Intrinsic Value of Share
The present value of a firm's expected future net cash flows discounted by the required rate of return.
Market Capitalisation Rate
The market-consensus estimate of the appropriate discount rate for a firm's cash flows.
Dividend Discount Model (DDM)
A formula for the intrinsic value of a firm equal to the present value of all expected future dividends.
Constant-growth DDM
A form of the dividend discount model that assumes dividends will grow at a constant rate
Dividend Payout Ratio
Percentage of earnings paid out as dividends.
Plowback Ratio (Earnings Retention Ratio)
The proportion of the firm's earnings that is reinvested in the business (not paid out as dividends).
Present Value of Growth Opportunities (PVGO)
Net present value of a firm's future investments.
Two-stage DDM
Dividend discount model in which dividend growth is assumed to level off only at some future date.
Price Earnings Multiple
The ratio of a stock's price to its earnings per share.
PEG Ratio
Ratio of P/E multiple to earnings growth rate.
Earnings Management
The practice of using flexibility in accounting rules to improve the apparent profitability of the firm.
Author
Lea_
ID
316816
Card Set
08 - Equity Valuation
Description
221 - Equity Valuation
Updated
2016-03-04T04:36:29Z
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