Dear all,
I read a training document which show the formulas for EV/EBITDA, EV/Sale and EV/EBIT (single stage). But I don’t understand and don’t know how these formulas are derived. Please kindly help me understand these formulas below:
g is long term growth rate
T is tax rate
D is depreciation
M is operating margin
Thanks you so much
g = ROE * (1 - dividend payout)
ROE = Net income/shareholder equity
WACC = ((Debt/(Debt+Equity+Pref. Shares))*(1-T)*(cost of debt))+((Equity/(Debt + Equity + Pref. Shares))*cost of equity (CAPM))+((Pref. Equity/(Debt + Equity + Pref. Equity)*(cost of Pref Equity))
CAPM = rf + beta(market risk - rf)
ROIC = (Net income - Dividends)/(Debt + Equity)