Valuation Methods

1. Book Value = Tangible Asset – Liabilities

PBV= Price to Book Value

2. Dividend

i. Growth firm: Rate of Return > cost of equity, firm should not give
dividend otherwise the market value can go down
ii. Declining firm: Rate of Return < cost of equity, firm should give 100%
dividend, otherwise the market value can go down
iii. Normal Firm: Rate of Return = cost of equity

3. Earning & Growth

EBITDA/Sales*100
PBT/Sales*100
PAT/Sales*100

EPS=PAT/No. of Shares
PE=MPS/EPS
Trailing PE=MPS/EPS of last 4 Quarters
Future PR= MPS/Future EPS

Sales/Share

EV=E+D-Cash
EV/EBITDA

4. ROE & Cash Flow

ROE
ROCE
ROA

Cash from Operating activities

1. Operating Profit
2. Working Capital = CA – CL
3. Tax (-)
Cash from Investment
Fixed Asset Purchased (-)
Fixed Asset Sold (+)
Investment Purchased (-)
Investment Sold (+)

Cash for Financing

Loan taken (+)
Loan Repayment (-)
Interest Payed (-)
Dividend payed (-)