Valuation ratios Flashcards
What does the values ratios shows
use to assess how the market is valuing the firm (its share price) in relation to its assets, earnings, profits and dividends
what are the valuation ratios
- equity book value per share (BVPS)
- Dividend yield
- dividend payout
- Trailing price-earnings or P/E
- forward P/E
- market-to-book
- earnings before interest, taxes, depreciation and amortization (EBITDA multiple)
how do you calculate equity book value per share
SE / Number of shares
how do you calculate dividend yield
dividend per share / price per share
how do you calculate dividend payout
?
how do you calculate trialing price-earnings or P/E
share price / earnings per share
how do you calculate forward P/E
share price / estimated earnings per share
how do you calculate market-to-book
share price / book value per share
how do you calculate earnings before interest, taxes depreciation and amortization
total enterprise value / EBITDA
how do you calculate total enterprise value
is an estimate of the market value of the firm
what does equity book value per share show
expresses shareholder’s equity on a per share basis
what does dividend yield show
expresses the dividend payout as a proportion of the current share price
- can be compared to the yield on other investment instruments, such as bonds or the stock of other dividend-paying companies.
what does trailing price-earnings or P/E show
an earnings multiple based on the most recent earnings
- often used to estimate the value of a stock
what does market-to-book show
estimates the dollars of share price per dollar of book value per share
- historical cost accounting as the basis for BVPS
- the degree to which market value per share exceeds BVPS indicates the value that has been added to the co. by management
what does earnings before interest, taxes, deprecation and amortization show (EBITDA)
expresses total enterprise value (TEV) for each dollar of operating income, or EBITDA
