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Relationship Between Revenue Multiple Expansion and EBITDA Margin and ROIC
1) What is a reasonable assumption of REVENUE exit multiple expansion based on growing EBITDA margins and ROIC? Example: Purchase multiple of 20x and over the course of 5 years, the margins improved by 4x and ROIC by 8x. 2) When the revenue and not EBITDA multiple expansion are concerned, do we even...
Comparable Company Analysis
How's it going, I was assigned to do a comparable company analysis for homework. However, I'm not sure if I did it correctly. The instructions were very vague so I had to do research and do the best(?) I can. This is the first time I attempt doing this, so I am looking for your opinions,...
Multiple valuation (year & ND)
Valuing a company and using multiples: 1. EV calc: when do you take a lets say 2016 ebitda multiple and 2016 ebitda estimate, and when do you take a 2015 multiple instead and the 2016 ebitda? 2. Also, when deriving the EV in 2016, do you deduct Dec 2016 net debt or the latest reported net debt which...
Question on entry multiple and exit multiple
Hi all, I have had an interesting conversation with a friends of friend. During the conversation she said "entry multiple should always be higher than exit; otherwise you have low return". I was trying to validate her statement. Can anyone help me on the matter? What's An Exit Multiple?
EBITDA Multiple method
Hi guys, Just got one interrogation this morning : Imagine 2 companies with an EBITDA of $100,000 But one company bought the walls on its office, of a value of 1 million $ The other is just paying a rent every months Let's imagine that in their specific industry (they are in the same industry) we...
Same EV/EBITDA; Different EV/Revenue
Two companies with the same EV / EBITDA A: EV /Revenue = 2 B: EV /Revenue = 1 which one you would invest and why
EBIT multiple or EBITDA multiple
What determines whether an industry uses the EBIT multiple versus the EBITDA multiple? I've heard that for capex heavy industries, EBIT is used more often since the depreciation in part covers the capital expenditures. However, woudldn't it be better to use an EBITDA - Capex multiple in this case?...
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