This page lists recent articles related to corporate finance on this website.
There are a large number of multiples you can choose from to do a multiples-based valuation. Examples include EV/Cash flow, EV/EBITDA, EV/EBIT, EV/Eyeballs, Value/Barrel, EV/Sales, EV/EBIT, EV/sales, etc. What factors help you decide on the multiples you pick? Which ones do you use? Which ones should you avoid? Are some multiples better than others?
We address this question here: “What factors help you decide which multiple to use in multiples-based valuations?”
There must be a connection between dividend payment and the beta. Have you noticed if there is a connection between dividend payment and the beta? If yes, in what direction is the relationship? Very interesting question. Are you sure?
We address this question here today. “Does dividend payment impact the beta? If yes, how?”
What does beta indicate? How is it connected with a company’s valuation? Does it cause a change in valuation or it is visa-versa?
We address this question here today: “Does the beta of a company provide any indication of the company’s valuation?”
What is Equity Beta? A simple question but one that you need to be clear on in PE or IB or any finance interview for that matter.
Risk is a given in any investment. It is incorporated into valuation in the cost of equity and debt which flows into the discount rate. International projects are considered higher risk given the potential for political and/or currency fluctuations. Therefore, a country risk premium is added to the discount rates for international projects. But how will you estimate a country risk premium if your firm operates in different countries? This page looks at how you can estimate the country risk premium for a multinational firm with operations in multiple countries.
We address the question: “How would you apply country risk premiums on a global company/multinational company?”
Risk is a given in any investment. It is incorporated into valuation in the cost of equity and debt which flows into the discount rate. International projects are considered higher risk given the potential for political and/or currency fluctuations. Therefore risk premium is added on international projects. This page looks at why this is so.
We address two questions here: How do you estimate country risk premiums? And – Name three methods to estimate country risk premiums.
Globalization has caused more correlation in world markets. Does that mean risk has increased? Or does higher correlation in international economies reduce risk?
We address this question today: “Has globalization over the last three decades enhanced risk and therefore the discount rates?”
Risk is a given in any investment. It is incorporated into valuation in the cost of equity and debt which flows into the discount rate. A risk premium is added on international projects. This page looks at why this may NOT be a good idea.
We address this question here today: “What is the argument for NOT using a country risk premium?”
Risk is a given in any investment. It is incorporated into valuation in the cost of equity and debt which flows into the discount rate. A risk premium is added on international projects. This page looks at why this is so.
This page answers the question: “When do you use a country risk premium? What is the argument for using a country risk premium?”
Estimating a market risk premium is challenging due to many reasons. None can predict the future! So we default to historical market risk premiums. Even when we agree that we can look to the past to arrive at an estimate of the market risk premium, there is significant disagreement on the time frame to be used. There is disagreement on the frequency to be used: daily, weekly? There is also disagreement on the method to be used: geometric average or arithmetic average as well as the market to be considered: US or London market or another one? Given these issues with market risk premium, do we have an alternative?
We address this question here: “Given the issues in estimating a market risk premium, can you suggest an alternative metric or method to arrive at risk premiums?”