Market Capitalization

Apple Vs Exxon Mobile

News: CNBC Aug 2012

Apple Becomes Biggest Stock Ever Most valuable company in terms of Market Cap

Apple and Exxon Mobils market caps is bigger than the individual market caps of 98 percent of the S&P 500 companies.

Whos More Valuable: Google or Apple?

June 25, 2013 http://blogs.wsj.com/moneybeat/2013/06/25/b ig-apple-bigger-google/

Enterprise Value to EBITDA

EV
Enterprise value (EV) is total company value(the market value of debt, common equity and preferred equity) minus the value of cash and investments.

Market cap limitations

Non traded share Management options Should include all equity claims on the company eg:- Cisco Convertible securities

Market value of Debt

Non traded debt -going companies Vs distress Co. Off balance sheet Dent -Lease commitments retail & restaurant companies

Cash
Cash must me simple to value ? Operating Vs non operating cash -Operating Cash or different business /Cross holding
Threat of double counting

-Cash need change over time Thumb rule of 2% of revenue

Trapped Cash repatriation /tax e.g: Apple $145 billion trapped $100 bn

EV/EBITDA
More appropriate than P/E for comparing with different financial leverages (because EBITDA pre-interest) More useful in an capital intensive business EBITDA is frequently positive when EPS is negative

EV/EBITDA drawbacks
Overestimate cash flow form operations when working capital is growing Analyst Vs Investor

EV for Financial Service Sector

Debt is source of Capital and Cash is a nonoperating asset to business ..not so for FS Will provide misleading info Market Cap preferred

Why different measure of value ?

During Acquisition ..debt and equity ..lay claim on target companys cash Individual Investor in a publicly traded company Consistency in Multiples