December 2008 Archive

If an e-business is not publicly held, then the question of valuation becomes more complicated. Whereas the market value of a publicly held company is determinable through stock prices and readily available accounting information, the market value of an entrepreneurial e-business is not readily available.The value of a privately owned Internet
company can be measured with methods that are appropriate for entrepreneurial businesses in general.The challenge is to identify practical, available measures that can be used as proxies for value creation of small and entrepreneurial businesses, which are not publicly traded.5 (more…)

Price-to-Cash Flow Ratio. According to Krishna Palepu,Victor L. Bernard, and Paul M. Healy, although the price-to-cash flow ratio would appear to use the information about cash flow from operations, it is better to use EBITDA as a proxy for cash flow from operations. Since
cash flow from operations (as reported in the cash flow statement) can be affected by fluctuations in working capital accounts (like accounts receivable, inventory, accounts payable, etc.), that cash flow information might be a noisy indicator of value as it stands alone.4 So, one could take the ratio: (more…)

Price/Earnings Ratio. As discussed in Chapter 2, the P/E ratio can be used to assess whether a company is over- or undervalued by the market. Another typical use of the P/E ratio is to assess what the market expects of the companys earnings in the future. A high P/E ratio based on historical data may indicate that the market expects the company to grow in the future. If the P/E ratio is calculated using forecasted EPS and that EPS is lower than the current EPS, then the P/E ratio, based on the lower forecasted EPS (i.e., a lower denominator), will be higher than the current P/E ratio.That higher P/E ratio will then indicate that the market expects a decline in earnings. (more…)

Communication and information is important part of human life. People are using communication and information tools to connect with other people. People are community, where they build their relationship and help each other. Communication and information is not only showed visual form or direct form but also in both oral and written. Communication and information tools are becoming knowledge source now.
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The value of a company as a whole, or of the stock price of the company, can be estimated or measured in many complicated ways. But the following group of valuation methods uses accounting information usually available to the average investor. So these valuation methods, referred to as price multiples, can be a useful way not only to value companies but also to compare companies and to examine how companies situations change from one year to the next.Those price multiples are: (more…)