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What is Enterprise Value?
Enterprise Value is the total cost to acquire a company.
The Enterprise Value of a company is the amount that would have to be paid for full ownership of it, which would include market capitalization (price per share x shares outstanding) + net debt (all liabilities - cash and equivalents).
Market cap alone is technically just shareholders equity, and not capital from debt, so Enterprise Value adds that in for consideration. Enterprise value is the numerator in EV/E (Enterprise Value over EBITDA), a very common valuation ratio.
Enterprise value and its associated ratios are fundamental analysis tools which can be used to compare companies with different capital structures; e.g. one with a lot of debt on the books and the other with mostly equity shares.
Cash is taken out of the equation since in an acquisition transaction the net cost would be reduced by the amount of cash purchased dollar for dollar, since that amount of cash would immediately be in the purchaser’s hands again. Preferred stock is considered debt for the purposes of this calculation.
What are Tax Benefits of Annuities?
Annuities are unique products in that they provide the owner with tax-deferred growth, much like an IRA or a Roth IRA
What are Housing Bonds?
Housing bonds are issued by state and local governments as a way to raise revenue that can help local banks and....
What is the Descending Triangle (Bearish) Pattern?
The Descending Triangle pattern has a horizontal bottom which represents the support level, and a down-sloping top line
How to use the Accumulative Swing Index in trading
The Accumulative Swing Index is a line representing the running total of an oscillator called the Swing Index. These tools were intended to help with swing trades
What is a Capital Account?
The Capital Account in a company is where paid-in capital, retained earnings, and treasury stock is accounted for
What are foreign exchange reserves?
Central banks and sometimes other banks and large corporations, hold reserves in foreign currencies as a hedge
What is market efficiency?
Market efficiency describes the degree to which relevant information is integrated into the price of a security
What are the Best Internet Sources for Financial Information?
There are plenty of well-informed and trustworthy sources out there, too. There are literally millions of websites
Is there such a thing as the “pre-holiday effect?”
Pre-Holiday Seasonality is the idea that prices will rise or fall before a holiday weekend
Is There Anything Else I Need to Know About Bonds?
The bond market is huge — actually larger than the stock market, if you can believe that — and there are literally...