Key terms used throughout the course

EBITDA

Earnings before interest, taxes, depreciation, and amortization; a proxy for operating profitability, not cash flow.

EBIT

Earnings before interest and taxes; operating profit after depreciation and amortization.

Enterprise Value

Value of a company's operating assets to all capital providers, commonly equity value plus debt-like claims less cash.

Equity Value

Value attributable to common shareholders after debt-like claims are satisfied.

Unlevered Free Cash Flow

Cash flow before financing costs available to debt and equity holders.

WACC

Weighted average cost of capital used to discount unlevered free cash flow.

Terminal Value

Estimated value of cash flows beyond the explicit forecast period in a DCF.

EV/EBITDA

Enterprise value divided by EBITDA, a common trading and transaction multiple.

Control Premium

Premium paid above unaffected market value to acquire control of a company.

Synergies

Expected value from combining businesses, usually from cost savings, revenue opportunities, or strategic benefits.

IRR

Annualized internal rate of return based on investment cash flows.

MOIC

Multiple of invested capital, calculated as proceeds divided by invested equity.

Net Working Capital

Operating current assets less operating current liabilities.

DSO

Days sales outstanding; accounts receivable divided by revenue times days in period.

Cash Sweep

Use of excess cash flow to repay debt after required operating cash is maintained.

Football Field

A valuation summary chart showing ranges from multiple valuation methods.