P/B ratio compares market capitalization to book value per share. Formula: Market Price per Share divided by Book Value per Share. Book value equals total assets minus intangibles minus liabilities divided by outstanding shares
Adjusted EBITDA removes non-recurring and irregular items from earnings. Formula: Net Income + Interest + Depreciation + Adjustments = Adjusted EBITDA. Calculated by adding back interest, taxes, and non-cash charges
P/B ratio compares company market capitalization to book value of equity. Market capitalization equals share price multiplied by total diluted shares. Book value equals assets minus liabilities. P/B ratio can be calculated as market cap divided by book value
Financial economics focuses on monetary activities and interrelationships between financial variables. Subject deals with resource allocation under uncertainty in financial markets. Built on microeconomics foundations and decision theory
EV/EBITDA compares company's Enterprise Value to Earnings Before Interest, Taxes, Depreciation & Amortization. EV equals equity value plus debt minus cash. EBITDA is often used as proxy for cash flow but not always useful
Precedent Transaction Analysis is one of the "Big Three" valuation methodologies. It's more optional than Comparable Company Analysis and DCF Model. Requires access to paid services like Capital IQ or FactSet