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Level II Equity – Financial Exam Help 123

Financial Exam Help 123

Category: Level II Equity

  • FCFF vs. FCFE

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    by

    Bill Campbell
    in ,

    Occasionally, you will need to know how to compute free cash flow to equity (FCFE) given free cash flow to the firm (FCFF), or how to compute FCFF given FCFE.  The formulae are relatively easy, but for sake of completeness I thought that I’d write a short article on them Recall that the formula for…

  • Present Value of Growth Opportunities (PVGO)

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    by

    Bill Campbell
    in

    Most companies don’t remain the same size (i.e., have the same amount of earnings, net income) forever; with a soupçon of luck, a company’s earnings will grow, year after year.  The value of a company’s opportunities to grow in the future is known, with no great originality, as the present value of growth opportunities (PVGO). …

  • Justified Ratios (Price Multiples)

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    by

    Bill Campbell
    in

    In general, price multiples – P/E ratio, price-to-book-value, and so on – are used for relative value comparison,  not absolute value.  That is, a company’s price multiples are generally compared to those of similar companies to determine whether the company’s stock is overpriced, fairly priced, or underpriced compared to the stock of its peers.  The…