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| Name | Equity Value vs. Enterprise Value and Valuation Multiples |
| Video Uploader | Video From Mergers & Inquisitions / Breaking Into Wall Street |
| Upload Date | This Video Uploaded At 13-10-2013 08:41:57 |
| Video Discription | Learn more: https://breakingintowallstreet.com/core-financial-modeling/?utm_medium=yt&utm_source=yt&utm_campaign=yt23 Learn how Equity Value and Enterprise Value change when a company issues debt, pays off debt, issues equity, and repurchases shares. By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" The key point is that regardless of how a company is financed, its Enterprise Value - and Enterprise Value-based multiples - do NOT change. Equity Value, however, may change depending on its share count and any shares it issues or repurchases. So even when a company changes its debt or equity or cash levels, valuation multiples such as EV / EBITDA and EV / Revenue will not change immediately afterward... whereas a multiple such as P / E (Price Per Share / Earnings Per Share, or Equity Value / Net Income) will change if new equity has been issued. It's just like when you buy a house - house is worth $500K regardless of whether you pay with 100% cash or 50% cash and 50% debt, or anything else in between... but depending on how much cash and debt you use, your own EQUITY IN THAT HOUSE will be different. The $500K total value of the house is like the Enterprise Value for a company. And if you contribute $250K of your own cash and take on a $250K mortgage, the $250K you chip in is your "Equity Value" and the $250K mortgage is the "Debt." Over time, your own "Equity Value" in that house will increase and your own "Debt" will decrease as you repay the mortgage, but the $500K total value for the house stays the same as long as the house's intrinsic value remains the same. This example uses Coca-Cola's filings and financial statements - you can find them and try this yourself right here: http://www.coca-colacompany.com/investors/annual-other-reports http://www.coca-colacompany.com/investors/investors-info-quarterly-filings (NOTE: The numbers, of course, will be different if you look at this video at a later date, but the concept remains the same and has always been the same ever since Equity Value and Enterprise Value were invented.) MENTIONED RESOURCES http://youtube-breakingintowallstreet-com.s3.amazonaws.com/KO-Equity-Value-Enterprise-Value.xlsx |
| Category | Education |
| Tags | equity value | enterprise value | valuation multiples | EBITDA | P/E | EV / EBITDA | Price Per Share / Earnings Per Share | market capitalization | debt issuance | debt repayment | stock issuance | stock repurchase | EV / Revenue | Breaking Into Wall Street | Mergers And Inquisitions | Excel Model Tutorial | Investment | m&a | valuation | ev | financial modeling | market cap | balance sheet | financial analysis | corporate finance | comparable public companies | operating income | cfi | free cash flow |
