Last updated: October 2017
This webpage represents a glossary (the “Glossary”) of terms, acronyms, and abbreviations, relating to the data and content that appear in the Valuation Multiples section of eval.tech (the “Website”). This Glossary is provided for information purposes only, and pertains directly to the content, material, and data, as presented on the Valuation Multiples section of this Website. This webpage has been prepared as a reference aid, solely for the users of the Website, and is intended to be used in conjunction with Valuation Multiples.
The Glossary is not exhaustive, and may contain certain generic financial terms and phrases familiar to finance professionals, valuation practitioners and consumers of financial data. It should be noted that some of the calculations relating to certain generic financial terms or phrases (as detailed in this Glossary), may have alternative methods of calculation, or substitute meaning.
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We provide a glossary of terms, acronyms, and abbreviations, relating to certain data elements and financial terms as detailed on the Valuation Multiples section of this Website:
Book Value of Equity ("BV"), as reported on the Balance Sheet. BV is equivalent to Shareholders' Equity
Total Assets - Total Liabilities
Cash Flow from Operations ("CFO"), as reported on the Cash Flow Statement. CFO represents the net cash flow from all operating activities, including continuing and discontinued operations.
Net Income + Non-Cash Charges + Adjustments for gains/losses on sale of Assets + Changes in Working Capital
The Debt-Equity Ratio is a measure of financial leverage. The ratio compares balance sheet reported total debt, versus the market value of equity.
Total Debt / Market Cap
Depreciation & Amortisation, as reported on the Cash Flow Statement. Depreciation & Amortisation represents the aggregate net amount of depreciation, amortisation, and accretion recognised within the accounting period.
Earnings-to-EBITDA is an indicator of profitability and earnings quality. Earnings-to-EBITDA measures the percentage Net Income generated from EBITDA.
Net Income / EBITDA
Earnings Before Interest and Tax ("EBIT") is an indicator of profitability, and roughly equivalent to Operating Income.
Revenue - Operating Expenses
Earnings Before Interest and Tax Margin ("EBIT Margin") is an indicator of profitability. EBIT Margin measures the percentage EBIT generated from Revenue.
EBIT / Revenue
Earnings Before Interest, Tax, Depreciation, and Amortisation ("EBITDA") is an indicator of profitability and roughly equivalent to Operating Income plus Depreciation & Amortisation
Revenue - Operating Expenses + Depreciation & Amortisation
Earnings Before Interest, Tax, Depreciation, and Amortisation Margin ("EBITDA Margin"),is an indicator of profitability. EBITDA Margin measures the percentage EBITDA generated by Revenue.
EBITDA / Revenue
Earnings (or Profit) before Tax ("EBT" or "PBT"), as reported on the Income Statement. EBT/PBT is an indicator of profitability, measured before the deduction of taxes due.
Net Income + Tax Expense
The Equity Multiplier is a measure of financial leverage, similar to the Debt-Equity Ratio.
Total Assets / Shareholders' Equity
Enterprise Value ("EV") measures total firm value. EV comprises Market Cap and Net Debt, and is often considered as the theoretical takeover price.
Market Cap + Total Debt - Cash & Equivalents
Enterprise-Value-to-CFO Multiple ("EV/CFO Multiple") is a valuation multiple. EV/CFO Multiple measures total firm value as a multiple of CFO.
EV / CFO
Enterprise-Value-to-EBIT Multiple ("EV/EBIT Multiple") is a valuation multiple. EV/EBIT Multiple measures total firm value as a multiple of EBIT.
EV / EBIT
Enterprise-Value-to-EBITDA Multiple ("EV/EBITDA Multiple") is a valuation multiple. EV/EBITDA Multiple measures total firm value as a multiple of EBITDA.
EV / EBITDA
Enterprise-Value-to-Revenue Multiple ("EV/Revenue Multiple") is a valuation multiple. EV/Revenue Multiple measures total firm value as a multiple of Revenue.
EV / Revenue
Enterprise-Value-to-Tangible-Assets Multiple ("EV/TangibleAssets Multiple") is a valuation multiple. EV/TangibleAssets Multiple measures total firm value as a multiple of Tangible Assets.
EV / Tangible Assets
Enterprise-Value-to-Total-Assets Multiple ("EV/TotalAssets Multiple") is a valuation multiple. EV/TotalAssets Multiple measures total firm value as a multiple of Total Assets.
EV / Total Assets
Enterprise-Value-to-Invested Capital Multiple ("EV/IC Multiple") is a valuation multiple. EV/IC measures total firm value as a multiple of Invested Capital (Debt and Equity).
EV / (Total Debt + Shareholders' Equity)
The Interest Burden is an indicator of financial health. Interest Burden measures interest expense as a percentage of operating income.
EBT / EBIT
Interest Coverage is an indicator of financial health. The Interest Coverage ratio measures the ability for a company to pay its current interest payments with available EBIT.
EBIT / Interest Expense
Market Capitalisation (Market Cap) is the market value of common equity. Market Cap is calculated by multiplying share price by the total number of common shares outstanding.
Share Price * Shares (Basic)
The Price-to-Book Ratio (P/B Ratio) is a valuation multiple. P/B Ratio measures the market value of common equity as a multiple of the book value of common equity.
Market Cap / Net Income
The Price-Equity Ratio (P/E Ratio) is a valuation multiple. P/E Ratio measures the market value of common equity as a multiple of Net Income earnings.
Market Cap / Net Income
Net Income Margin is an indicator of profitability. The Net Income Margin (or Profit Margin) measures the percentage Net Income generated from Revenue.
Net Income / Revenue
Report Date represents the fiscal period end date. Report Date is equivalent to Filing Date.
Return on Assets ("ROA") is an indicator of profitability and provides an overview of the capital intensity of a company. ROA measures the percentage Net Income generated from Total Assets.
Net Income / Total Assets
EBIT Return on Assets is an alternative indicator of profitability, similar to traditional ROA; however, ROA (EBIT) measures the percentage EBIT generated from Total Assets.
EBIT / Total Assets
EBITDA Return on Assets is an alternative indicator of profitability, similar to traditional ROA; however, ROA (EBITDA) measures the percentage EBITDA generated from Total Assets.
EBITDA / Total Assets
Return on Capital Employed is an indicator of profitability. ROCE measures the percentage Net Income generated from total capital employed (Debt and Equity).
Net Income / (Shareholders' Equity + Total Debt - Cash & Equivalents)
Return on Capital Employed (EBIT) is an indicator of profitability. ROCE (EBIT) measures the percentage EBIT generated from total capital employed (Debt and Equity).
EBIT / (Shareholders' Equity + Total Debt - Cash & Equivalents)
Return on Capital Employed (EBITDA) is an indicator of profitability. ROCE (EBITDA) measures the percentage EBITDA generated from total capital employed (Debt and Equity).
EBITDA / (Shareholders' Equity + Total Debt - Cash & Equivalents)
Return on Equity ("ROE") is an indicator of profitability. ROE measures the percentage Net Income generated from Shareholders' Equity.
Net Income / Shareholders' Equity
Return on Equity (EBIT) is an indicator of profitability. ROE (EBIT) measures the percentage EBIT generated from Shareholders' Equity.
EBIT / Shareholders' Equity
Return on Equity (EBITDA) is an indicator of profitability. ROE (EBITDA) measures the percentage EBITDA generated from Shareholders' Equity.
EBITDA / Shareholders' Equity
Return on Tangible Assets ("ROTA") is an indicator of profitability. ROTA measures the percentage Net Income generated from Tangible Assets.
Net Income / Tangible Assets
Return on Tangible Assets (EBIT) is an indicator of profitability. ROTA (EBIT) measures the percentage EBIT generated from Tangible Assets.
EBIT / Tangible Assets
Return on Tangible Assets (EBITDA) is an indicator of profitability. ROTA (EBITDA) measures the percentage EBITDA generated from Tangible Assets.
EBITDA / Tangible Assets
Return on Tangible Capital Employed (ROTCE) is an indicator of profitability. ROTCE measures the percentage Net Income generated from Tangible Capital Employed (Debt and Equity).
Net Income / (Shareholders' Equity + Total Debt - Cash & Equivalents - Intangible Assets)
Return on Tangible Capital Employed (EBIT) is an indicator of profitability. ROTCE (EBIT) measures the percentage EBIT generated from Tangible Capital Employed (Debt and Equity).
EBIT / (Shareholders' Equity + Total Debt - Cash & Equivalents - Intangible Assets)
Return on Tangible Capital Employed (EBITDA) is an indicator of profitability. ROTCE (EBITDA) measures the percentage EBITDA generated from Tangible Capital Employed (Debt and Equity).
EBITDA / (Shareholders' Equity + Total Debt - Cash & Equivalents - Intangible Assets)
Tax Burden measures the percentage Net Income retained after taxes.
Net Income / EBT
Working Capital ("WC") is an indicator of financial health. WC measures operating liquidity and efficiency, and reflects on the ability to meet short-term liabilities.
Current Assets - Current Liabilities
Working Capital to Tangible Assets is an indicator of financial health. WC-to-Tangible Assets measures net assets as a percentage of Tangible Assets, and is an indicator of short-term liquidity.
WC / Tangible Assets
Working Capital to Total Assets is an indicator of financial health. WC-to-Total Assets measures net assets as a percentage of Total Assets, and is an indicator of short-term liquidity.
WC / Total Assets