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Net asset value. Net asset value ( NAV) is the value of an entity's assets minus the value of its liabilities, often in relation to open-end, mutual funds, hedge funds, and venture capital funds. [ 1][ 2] Shares of such funds registered with the U.S. Securities and Exchange Commission are usually bought and redeemed at their net asset value. [ 3]
In corporate finance, free cash flow to equity ( FCFE) is a metric of how much cash can be distributed to the equity shareholders of the company as dividends or stock buybacks —after all expenses, reinvestments, and debt repayments are taken care of. It is also referred to as the levered free cash flow or the flow to equity (FTE).
Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period , together with a continuing or terminal value that represents the cash flow ...
Accounting equation. The fundamental accounting equation, also called the balance sheet equation, is the foundation for the double-entry bookkeeping system and the cornerstone of the entire accounting science. Like any equation, each side will always be equal. In the accounting equation, every transaction will have a debit and credit entry, and ...
Methods to calculate cost basis. The cost basis for stocks and mutual funds is generally the price you paid when you purchased the asset, plus any other trading costs. However, there are several ...
Valuation using multiples. In economics, valuation using multiples, or "relative valuation", is a process that consists of: identifying comparable assets (the peer group) and obtaining market values for these assets. converting these market values into standardized values relative to a key statistic, since the absolute prices cannot be compared.
Pre-money valuation. "Pre-money valuation" is a term widely used in the private equity and venture capital industries. It refers to the valuation of a company or asset prior to an investment or financing. [ 1] If an investment adds cash to a company, the company will have a valuation after the investment that is equal to the pre-money valuation ...
Residual income valuation ( RIV; also, residual income model and residual income method, RIM) is an approach to equity valuation that formally accounts for the cost of equity capital. Here, "residual" means in excess of any opportunity costs measured relative to the book value of shareholders' equity; residual income (RI) is then the income ...