What confuses me is similar to what confuses stefanboro above, I think. The balance sheet equation is for operating assets and equity, which are not the same, mathematically, as EV(the market value of the enterprise) and Mkt Cap. It seems to me the ratios of EV-to-OperatingAssets, and MktCap-to-BookValue (P/Bk?) should be significant. I have trouble with terminology when learning complicated new subjects.
so EBITDA is the "raw cash" that a company makes. But technically, since EBITDA is NI + a bunch of added back line items, and NI isn't actually cash ( that's why analysts look at Price/Cash flow to put P/E in perspective) , then what is ebitda technically? isn't it just a theoretical profit number like NI but one that only excludes COGS and SG&A?
also, i've herd that EBITDA is a proxy for cash flow. Which cash flow? OCF, or FCF? and how so? can you elaborate? Thnks
Sal, i wish i could meet you someday to thank you for your incredible videos. Both your knowledge and teaching skills are superb. By the way i have only watched your math and stats videos - (and looking forward towards more stats videos eagerly since it my weak area). Having done MS in Finance, i m watching your finance videos just because i m addicted to your voice.
I'd pay for this ... now i know how much these series helped me. I failed my exam and have a resit now but thanks to your videos I understand it a bit better. Now to look at the cash flow statement :) Thanks alot.
I created my youtube account today, to thank you for the great video. Your videos summarized my year-long 2nd year university course. Thank you for taking time to create and share your videos.
"Brilliant" is not the word to describe this video !!! Untill now, I used to feel a little overwhelmed whenever I came across the word Enterprise Value" thinking it to be rather complicated for a layman. BUT TODAY ITS SEEMS SO LOGICAL AND COMMON SENSE !!! cant praise as well as thank the guy explaining the concept, enough.Look forward to some other such awesome videos. KEEP IT UP. CHEERS DUDE !!!
Market cap is the market value of the equity so if you want to establish the market value of the EV, you would use market cap. Book value of equity would give you the book value of EV
@stefanboro. I would say that book value is only really important when trying to figure out the value of "capital intensive businesses". like a bank or any company that needs capital and assets to generate income/revenue, example: GE, CAT, BAC. Think about an internet company though, they are NOT a capital intensive business. Their profits are made from intellectual property and other such things. So in the case of a non-capital intensive business cash flow and income are more important. than BV
I want to draw as well. What is this program?
numerouss 4 months ago
What confuses me is similar to what confuses stefanboro above, I think. The balance sheet equation is for operating assets and equity, which are not the same, mathematically, as EV(the market value of the enterprise) and Mkt Cap. It seems to me the ratios of EV-to-OperatingAssets, and MktCap-to-BookValue (P/Bk?) should be significant. I have trouble with terminology when learning complicated new subjects.
de0den 5 months ago
very well done. Question:
so EBITDA is the "raw cash" that a company makes. But technically, since EBITDA is NI + a bunch of added back line items, and NI isn't actually cash ( that's why analysts look at Price/Cash flow to put P/E in perspective) , then what is ebitda technically? isn't it just a theoretical profit number like NI but one that only excludes COGS and SG&A?
also, i've herd that EBITDA is a proxy for cash flow. Which cash flow? OCF, or FCF? and how so? can you elaborate? Thnks
teknashend 8 months ago
Hello, when you talk about "Debt", does that include things like holiday pay liability, tax liability and accounts payable?
Captnzoss 9 months ago
This was more than smart - thank you!
49fiori 9 months ago
dude you are a freaking genius. i am so jealous and am going to watch all your videos. especially the finance related material
tamubasketball 10 months ago
Sal, i wish i could meet you someday to thank you for your incredible videos. Both your knowledge and teaching skills are superb. By the way i have only watched your math and stats videos - (and looking forward towards more stats videos eagerly since it my weak area). Having done MS in Finance, i m watching your finance videos just because i m addicted to your voice.
afaqkhanpwr 1 year ago
you sal deserve the nobel prize for education!!!
eulima19 1 year ago
Tell you what... besides Dr.Borghesi, you are the 2nd best person to teach this stuff. you guys deserve 5 stars :)
DBrazilianBeauty 1 year ago
@DBrazilianBeauty Who is Dr. Bordhesi?
forthewin29 1 year ago
really have no words...simply OUTSTANDING!!!!!...Cheers!!! Sal.
NHS1978 2 years ago
Was of great help. Thank you :)
agamav 2 years ago
I'd pay for this ... now i know how much these series helped me. I failed my exam and have a resit now but thanks to your videos I understand it a bit better. Now to look at the cash flow statement :) Thanks alot.
dlus1on 2 years ago
I created my youtube account today, to thank you for the great video. Your videos summarized my year-long 2nd year university course. Thank you for taking time to create and share your videos.
elfenelfenelfen 2 years ago
@elfenelfenelfen I agree, he is amazing!
49fiori 9 months ago
"Brilliant" is not the word to describe this video !!! Untill now, I used to feel a little overwhelmed whenever I came across the word Enterprise Value" thinking it to be rather complicated for a layman. BUT TODAY ITS SEEMS SO LOGICAL AND COMMON SENSE !!! cant praise as well as thank the guy explaining the concept, enough.Look forward to some other such awesome videos. KEEP IT UP. CHEERS DUDE !!!
NHS1978 2 years ago
Awesome clarity and ease of talking , the best part is it looks natural
Atul
atultiwari1000 2 years ago
cant wait for the next video
vinniepaz730 2 years ago
So If EV/EBITDA = P/E .. what does that imply? hmmm....
Frize01 2 years ago
Wow!
abab676 2 years ago
Sal you are a ledge! you explain EV the best... I never understood it till now and i have just taken my final chartered accountancy exams!
Thanks to you I understand the difference between book value techniques and market value techniques...
Jakers2009 2 years ago
you are awesome! it would be nice if you did such line by line explanation of "typical" balance sheets and cash flow statements too!
pytube2007 2 years ago
I am only 3 mins into the video so I ask this question without viewing the full contents of the video.
You say that EV + cash = Debt + market cap
However, won't the market cap be different from the book value of shares?
Therefore is it not incorrect to have market cap in the equation as opposed to tbe book value of equity?
stefanboro 2 years ago
Market cap is the market value of the equity so if you want to establish the market value of the EV, you would use market cap. Book value of equity would give you the book value of EV
khanacademy 2 years ago
@stefanboro. I would say that book value is only really important when trying to figure out the value of "capital intensive businesses". like a bank or any company that needs capital and assets to generate income/revenue, example: GE, CAT, BAC. Think about an internet company though, they are NOT a capital intensive business. Their profits are made from intellectual property and other such things. So in the case of a non-capital intensive business cash flow and income are more important. than BV
cmares5858 8 months ago