July 2013
Beginner to intermediate
432 pages
8h 6m
English
book
Financial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity
by Paul Pignataro
Content preview from Financial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
CHAPTER 7
What Is Value?
The most important question before even getting into valuation techniques is this: What is value? To help answer this question we note there are two major categories of value:
1. Book Value. Book value is the value of an asset or entire business entity as determined by its books, or the financials.
2. Market Value. Market value is the value as determined by the market.
BOOK VALUE
The book value can be determined by the balance sheet. The total book value of a company’s property, for example, can be found under the net PP&E in the assets section of the balance sheet. The book value of the shareholder’s interest in the company (not including the minority interest holder) can be found under shareholder’s equity. Walmart’s shareholder’s equity value of $71, 315 is the book value of its equity to the shareholders.
MARKET VALUE
The market value can be defined by its market capitalization, or shares outstanding times share price. Walmart, which is currently trading at $73.82 and has 3, 365.7MM diluted shares outstanding (see Chapter 1 on diluting shares), has a market capitalization of $248, 459.0 MM. This is Walmart’s market value.
These values represent the equity value of a business. The equity value of a business is the value of the business attributable to just equity holders; that is, the value of the business excluding debt lenders, minority interest holders, and other obligations.
Shareholders’ equity, for example, is a value of the company’s assets ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.