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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...
valuation multiple and tax shield
Hello, I'm wondering if we should consider the multiple => NI to common without tax shield / Equity value, => instead of NI to Common including tax shield / Equity Value (which is more traditional = easily comparable to market data) My reasoning: When using an implied multiple, to get an...
Why EBITDA instead of Net Income
Was asked this question and didn't know the answer, can someone help? I can't find it anywhere on the site. Any help is greatly appreciated.
Strange multiple and debt in acquisitions?
Question 1> Asked in an interview: Would the following multiple be appropriate: Enterprise Value / (EBITDA - Tax) Both the numbers should still be apples-to-apples right? But would subtracting Tax have an impact on tax shield etc (thus apples-to-ornages)? Question 2> What normally happens to debt of...
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