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Comps Multiples Interview Questions
Hey folks, I've been tested with a few questions about multiples and wanted to understand them more fully: 1) There are two operationally identical companies. HighD has a high debt balance. LowD has low debt. Assume the WACC is the same for both. Assume the market values both companies correctly....
EV / EBITDA Multiple: Investment needs
Hi @all, in one of my university courses, there is the following statement: " Main criticism to EV/EBITDA: does not properly reflect investment needs: " Now, my question amounts to: why? When looking at the formula uploaded by Damodaran, ceteris paribus, a company that needs to reinvest more to...
Why are non-operating assets not a part of EV if non-operating income is a part of EBIT?
Hey guys, if I am not mistaken, the difference between operating income and EBIT is that EBIT also contains non-operating income (at least Investopedia explains it this way). Now, if we use EBIT/EBITDA for multiples and EBIT to derive FCFF, shouldn't non-operating assets (which generate the...
Help on Interview Question
Company trades at an EV/EBITDA of 8x, payout ratio of 75%, yield 9% and a ROE of 12%. What is cost of equity?
Adjusted EBITDA / Trading comps valuation
Hi there, I have a small question about adjusted EBITDA and multiples. When we hear about a company valued at 15 times its EBITDA, is it its adjusted EBITDA? Also when using trading comps, are we going to take multiples of comparable companies EV/EBITDA adjusted? Thank you for your help
Best Source for Deal metrics | S&P IQ vs Merger Market
I am mainly using Mergermarket (don't have access to Pitchbook) and S&P IQ. When using Mergermarket, most deals show no EBITDA multiple, when using S&P IQ, the comparable transactions are not really comparable. Any other source worth trying? Thanks,
Why does a Low EV/EBITDA Multiple Make a Good Acquisition Target?
Read that EV / EBITDA multiple = good acquisition candidate...but why is this? What makes high EV / EBITDA not a good candidate? And in general, is a company with a smaller ev / ebitda inferior or superior to rival company with higher ev /ebitda? Thanks you What is EV /EBITDA? Enterprise Value /...
Technical Wording - Query
If 100% cash acquisition of an entity totals £100m, is this the market capitalisation or the Enterprise Value? I presume we would need to add this to net debt to get EV . I've only been given two numbers, acquisition price and pre-overhead EBITDA (£10.1m), and told to discuss my view on deal...
Valuation Multiples
According to the M&I guide, you are likely to use the EV /EBIT multiple for companies in industries where D&A is large. The multiple will be sensitive to D&A. Then why would a good industry-specific multiple for Retail be EV /EBITDAR (R = Rent)? Also according to the M&I guide, it says Rent is a...
Growth Opportunities - Proxy - Information Asymmetry.
Hi all, Smith and Watts (1992) argue that the degree of information asymmetry is larger for firms with significant growth opportunities, since managers of high growth firms have privileged knowledge about the firm’s investment opportunities and insights in the expected future cash flows from their...
Need some input regarding technicals
Hi, had several interviews and bumped into 2 technicals which I didn't feel like I answered appropriately (wishy-washy). Would appreciate if anyone could share their insight on how they would approach these questions: 1) Company A: EV / EBITDA 4 Company B: EV / EBITDA 6 P/E: same for both What can...
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