Valuing Stocks Flashcards
1
Q
EBIT vs EBITA
A
earnings before interest and taxes
vs
earnings before interest, taxes, depreciation, and amortization
2
Q
expected return formula
A
r = (DIV1 + P1 - P0) / P0
DIV = dividend
3
Q
price formula
A
P0 = DIV1 + P1 / 1 + r
4
Q
dividend yield formula
A
r = (DIV1 / P0) + g
5
Q
return on equity formula
A
ROE = earnings per share / book equity per share
6
Q
net present value of growth opportunities (PVGO) formula
A
P0 = (EPS / r) + PVGO
EPS = earnings per share
7
Q
Free cash flow (FCF)
A
after tax cash flow
subtracting investment required for growth
=> amount of cash available for payout to all shareholders
