Financial Valuation methods Flashcards
Zero growth model equation
Stock price = Dividend / required return
PEG ratio is a measure that shows what?
The effect of the earnings growth on a company’s P/E.
Lower PEG ratio is attractive to investors
PEG ratio calculation
PEG = (Stock price today/ EPS) / Growth
Stock price and dividend grow at the same
Rate
A valuation technique that is used for start up companies or when earnings are very low is?
Price Sales ratio
High price earnings (P/E) ratio indicates
overvalue or high growth potentials
P/E ratio measures
The amount that investors are willing to pay and they anticipate more growth
What is the least acceptable method for determining accounting estimates of fixed assets or salvage value
Industry consensus since the fixed asset is unique to the company
When you have a limited intangible asset transactions and no reliable estimates of income/cash flows. What approach should you use
Cost approach
Methods for valuing tangible assets
CALM
Cost method
Market value method
- market value
- net realizable value
Appraisal method
Liquidation method
Methods for valuing intangible assets
Market approach
Income approach
Cost approach
