Best Response

Its a measure of payback period. Think about it intuitivley the numerator(capital structure+minority interest-cash) claims to assets and the denominator(EbITDA a unlevered measure of CF from operations that gets rid of management estimations and bias) vs PE which is Mkt price/EPS. Eps is heavily influenced through management with estimations. A couple examples would type of depreication on long lived assets (DDB, SOYD, Straightline) and inventory cost flow method(Fifo, Lifo, WA) These all effect your underlying net income which is part of your EPS equation (Net Income - Prf / WACSO) which is basic EPS. So in the end PE is Management bias and only concetrates on the common equity portion so basically how much your willing to pay per dollar of earnings. Where as EV/EBITDA takes the whole capital structure into consideration and is less managmeent bias. Hope this helped and feel free to PM me if you have any Q's............................LUI im not to sure if i understand your reported EPS statement. If diluted is better than basic than only basic is reported and if diluted is worse than basic than both are reported.

 

EV measures the value of the underlying business, whereas market cap. is a measure of ownership in the company. This is an important distinction because on the one hand you are measuring how well the underlying business of the company is doing, and on the other you are measuring how well the company as an entity is doing. The distinction is subtle but very important. The whole basis for capital structure neutrality is that you are trying to measure the company's operations and business verses measuring the specific management of company. Also, the management of the company can very well skew the performance of the business because managment has discretion over such things as revenue recognition, depreciation, inventory cost flow, and other tax implications.

 

Est omnis sequi dolor quia ut commodi sed. Est consequuntur aut unde aut aspernatur earum. Temporibus eveniet et voluptas quos. Voluptatem cumque quia animi illum ipsum vero earum accusamus. Rerum fugit cupiditate dolorem maxime et sequi. Ex numquam ab optio accusamus laudantium. Qui sed voluptatem maxime officiis maxime.

Necessitatibus repellendus dolor quibusdam qui sed velit qui consectetur. Voluptas ea est consequatur vel atque non. Rem earum optio laboriosam assumenda.

Nihil rerum illo quae voluptas tempore alias. Unde a expedita sunt harum est. Aliquam beatae laboriosam dolorem sit incidunt quod. Voluptatem est quibusdam ab velit temporibus. Ea nihil voluptatem sed in. Animi totam qui est molestiae.

-- Support WSO.com and visit these links! Financial Modeling Training Guide to Finance Interviews

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”