Business & Financial Valuation Formulas

In this section, we explain in detail some of the most common financial valuation tools that businessese & investors in the Finance world use to run their businesses, acquire new businesses, issue shares of stock and other Corporate activities.

>> Economic Value Added (EVA) - How to Calculate Economic Viability of a Corporation
Tutorial Added: March 28th, 2010
Performance ratio that determines the true economic profitability of a corporation because it factors in net operating income after taxes & interest minus the opportunity cost of capital deployed to earn that net operating income...

>> EBITDA - Earnings Before Interest, Taxes, Depreciation & Amortization Expense
Tutorial Added: March 25th, 2010
Earnings before Interest, Taxes, Depreciation & Amortization expense. EBITDA is a tool to measure the value of a firm based on its net earnings before non-cash expenses (depreciation & amortization) are recorded...

>> How to Calculate Return on Investment (ROI)
Tutorial Added: March 23rd, 2010
Financial valuation method that determines the percent of return investors are getting from their portfolio of investments.

>> Return on Invested Capital (ROIC) Formula
Tutorial Added: March 20th, 2010
Top level way to measure the historical & current performance of a corporation across all the capital it has invested in its business.

>> Operating Cash Flow - Managing Cash Flows Generated from Business Operations
Tutorial Added: March 17th, 2010
Verification of quality of the company's reported earnings by comparing it to cash.

>> Earnings per Share - Measuring the Economic Value of a Stock
Tutorial Added: March 13th, 2010
A method of standardizing a company's net income left over for shareholders across all companies.

>> Price to Earnings (P/E) Ratio - Calculating Earnings Growth & Relative Value of Stock Prices
Tutorial Added: March 13th, 2010
Compare the current price of a common stock trading on the market with the Earnings per Share (EPS) that company yields.

>> Weighted Average Cost of Capital – Examining the Capital Structure of a Corporation
Tutorial Added: January 16th, 2010
Total return (in percent) expected of an organization on all assets, debts and owner’s equity to maintain its current stock price & valuations.

>> Arbitrage – Process of Buying/Selling Complementary Securities
Tutorial Added: January 23rd, 2010
Ability to trade in complementary securities (buying and selling stocks, commodities or ETFs) in two different markets at the same time.

>> Dollar Cost Averaging - Calculating the Average Share Price
Tutorial Added: January 5th, 2010
Investment mechanism where stocks are bought at constant dollar amounts at regularly spaced intervals, with the most amount of stocks bought at the lowest stock prices possible.