How would you valuate a Private retail company with negative EBIT?
Hi everyone,
I had a question to prepare for my upcoming interview. I cannot find too much information online. I appreciate any help. Thank you.
Hi everyone,
I had a question to prepare for my upcoming interview. I cannot find too much information online. I appreciate any help. Thank you.
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you would use a dcf as presumably EBIT won't be negative for the next 5 years
Could also look at some sort of harvest case when you cut off growth spending and let the existing business cash flow
Depending on the type of business, EBIT might be negative due to Revenue Recognition.... for instance if they are franchising or signing agreements that are to be served over a number of years, they are generating cashflow in the meantime, but cannot recognize the revenue until it has been earned. Thus could be cashflow positive but still showing negative EBIT.
Ev/revenue I’ve used this when working with ebit negative medical device start ups
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