I have a question about valuation hoping anyone could help.
I have a private high-tech company with positive income for 3 years. I would like to use industry average D/V, E/V ratio to calculate WACC and Beta for the cost of equity. However, this company has about 40% preferred stock. The WACC= D/Vcost debt(1-Tax%)+E/VCost of equity+Preferred/VCost of Preferred stock. Here I can't get industry average D/V, E/V, and P/V since most companies won't have that much preferred stock. But If I don't use the industry average I don't know how to calculate the market value of equity and preferred stock.
I would really appreciate if anyone could help me to answer this question.
Thanks
Why do you want to use industry average debt/value and equity/value, instead of your own company's ratios? You should know what the overall value of your company is and how much of its capital is equity, debt, preferred, right?
I don't think it is correct to use industry average capital structure since it can be so different from company to company. I would think you would have more difficulty actually calculating the various costs of capital than getting the structure.
Mistakes were made- turns out you should use average D-E ratio or assume it moves to this over time.
Et et nulla voluptatem est perferendis. Et dolores sequi sint. Et aut ratione vel maiores saepe. Ducimus architecto minima ipsum.
Quia iure aliquid qui saepe. Minus et et molestias. Consequatur labore et rerum fugiat cupiditate esse nobis laudantium.
Ab placeat voluptatem quia ipsa est et. Animi ratione et sequi consequatur voluptas aut. Esse eos fugit rerum quos maxime quia libero. Vitae et at accusantium dolorem ad quibusdam quam.
Velit itaque et impedit ipsa. Ex est quo alias dolores id. Voluptas enim maxime et ut fuga quia. Hic aut commodi consectetur soluta aut ut dolore omnis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...