vania-janet/multiturn-rag-retrieval-data huggingface dataset:
To determine the value of one's life, instead of rating happiness from 1 to 10 every day in pink ink in a secret diary, use the concept of mercantile exchange to determine the value of your existence. First, offer your time for some initial price ($10) to some investors (Bob). Then, create an order book where anyone can make a bid or ask for your time. For example, Bob creates a sell order for 10 min of your time for $20. Mary creates a buy order for 10 min of your time for $20--Bob sells 10 min of your time to Mary for $20. Based on the supply and demand for your time, you could determine the value of your existence. Obviously, your time would no longer be yours, but it's interesting to consider nontheless and precisely equivalent to the process that determines stock price. (Ignoring the minutiae of order books and IPOs.)
I said the point is to create value. For a growth company, the best way to create value is to reinvest cash in the business and grow the company so that they can have larger earnings and therefore larger dividends in the future.  For a company like Apple, which is no longer a growth company, they should be distributing earnings instead of hoarding them and essentially buying treasuries on their shareholders' behalf.
Shareholders are the equity holders. They mean the same thing.  A simplified formula for the total value of a company is the value of its equity, plus the value of its debt, less its cash (for reasons I won't get into). There are usually other things to add or subtract, but that's the basic formula.
The standard goal of valuing anything is to seek the fair price for that thing in the open market. Depending on what is being valued, that may or may not be an easy task. eg: to value your home, get a real estate appraiser, who will look at recent market sales in your area, and adjust for nuances of your property. To value your loan guarantee, you would need to figure out what it is actually worth to the business, which may be difficult. In a perfect world, you would be able to ask the bank to tell you the interest rate you would have to pay, if the loan was not guaranteed. This would show you the value you are providing to the business by guaranteeing it. ie: if the interest would be $100k a year unguaranteed, but is only $40k a year guaranteed, you are saving the business $60k a year. If the loan is to last 5 years, that's a total of $300k. Of course, it is likely the bank simply won't offer you an unguaranteed loan at all. This makes the value quite difficult to determine, and highlights the underlying transaction you are considering:  You are taking on personal risk of loan default, to profit the business. If you truly can't find an equitable way to value the guarantee, consider whether you understand the true risk of what you are doing. If you are able to determine an appropriate value for the loan, consider whether increasing your equity is fair compensation. There are other methods of compensation available, such as having the company pay you directly, or decrease the amount of capital you need to invest for this new set of equity.  In the end, what is fair is what the other shareholders agree to. If you go to the shareholders with anything less than professional 3rd party advice (and stackexchange does not count as professional), then they may be wary of accepting your 'fee', no matter how reasonable.
Valuations are literally 100% driven by retail investors who 20 years ago were literally peasants and are not grounded in reality. I'm working at a small IB in China over the summer. The IPO I'm working on is a small cnc machining company. Some of its competitors are literally trading at 100x EBITDA, growing sales at literally 5%. Nobody who is in a management position has any inkling of how finance works(not to say they're not smart, just that they have no experience).
Stock valuation is a really sticky business, although they are ways to value it, it is somewhat subjective(expectations are calculated). But it will be at premium most likely, can't tell how much without any numbers.(wouldn't be able to tell with the numbers as well since i do not have any knowledge in the sector)
"You can't run a business without making ""$$$"".   Good will and good intentions only go so far and they do not always equate to positive results. Capitalism rewards the positive results of proper decision making in the market place as businesses generate enough profit to allow them to stay afloat and expand, while those businesses that do not follow through with proper decision making reap negative results, fail and eventually go out of business. These are irrefutable facts which govern how capitalism works, i.e. success is rewarded, failure is punished and both of these results serve as lessons for all others in the marketplace who dare to heed these lessons based offered up by success and failure which are to be found in a capitalist economy.   So if the current market conditions dictate that allowing workers more free time, increased perks, etc will increase productivity and lead to success then it is only rational and reasonable for businesses to attend to the needs of their employees.   However if the costs of these perks begin to spiral out of control and/or are no longer relevant or favorable in the marketplace then cost cutting measures are needed to ensure that businesses are able to secure their profits and stay afloat. Those who do not rein in or alleviate these cost issues in their businesses will quickly go under as these costs eat out their bottom line and competitors move in to under-cut them in the market place. Nevertheless attempting to place some sort of emotional or political reasoning and judgment as to how and why businesses act in regards to cost cutting measures without first taking into account the reality of the circumstances in which they must operate in, i.e. having to make a profit in order to survive, is unreasonable and flat out childish."
New to Reddit (please forgive any struggles with propriety) and created this post because I could not find any relatively recent discussions on corporate social responsibility or created shared value. I'm passionate about advocating for an intuitively triple bottom line economic system where compassion is logically and holistically advantageous. Curious to know if anyone can provide sound arguments for why that vision will never come true or won't come true anytime soon. Basically, I want to have a real micro/macro critical discussion on CSR and CSV.
"Yes, the value of a stock is completely, 100% determined by what people are willing to pay for it in conjunction with what people who have it are willing to sell it for. If something really bad happened to a company, like their only factory burned to the ground, and the traders didn't care, then I guess, in that scenario, the value of the stock would not change. But you can spin all sorts of hypotheticals of that sort. If dogs could talk, would German Shepherds speak German? Etc. Any answer is pretty meaningless because the premise is wildly unlikely. As CQM notes, ""traders"" in this context means everyone who buys or sells stock. If you buy stock, that includes you. They're not some mystical cabal somewhere. If you see a stock listed at, whatever, $50, and you are not willing to pay more than $40 for it, then you refuse to buy, and so you tend to force the price down. If you're not a billionaire, then your impact on the market is tiny, but the market is made up of millions of people each with tiny influence. Note that all this is true not just of the stock market, but of every product on the market. A product is worth whatever the owner is willing to sell it for and people are willing to pay. This is what determines the price of everything from houses to toasters. It's a little theory I've invented that I like to call, ""the law of supply and demand"". :-)"
The EV should, therefore, correspond to the market value of the assets that were used to generate the profits in question, excluding assets acquired (and including assets disposed) during a different financial reporting period. This requires restating EV for any mergers and acquisitions (whether paid in cash or equity), significant capital investments or significant changes in working capital occurring after or during the reporting period being examined. Ideally, multiples should be calculated using the market value of the weighted average capital employed of the company during the comparable financial period. When calculating multiples over different time periods (e.g. historic multiples vs forward multiples), EV should be adjusted to reflect the weighted average invested capital of the company in each period. In your question, you stated: The Market Cap is driven by the share price and the share price is determined by buyers and sellers who have access to data on cash and debts and factor that into their decision to buy or sell. Note the first point under ""Technical Considerations"" there and you will see that the ""access to data on cash and debts"" isn't quite accurate here so that is worth noting. As for alternatives, there are many other price ratios one could use such as price/earnings, price/book value, price/sales and others depending on how one wants to model the company. The better question is what kind of investing strategy is one wanting to use where there are probably hundreds of strategies at least. Let's take Apple as an example. Back on April 23, 2014 they announced earnings through March 29, 2014 which is nearly a month old when it was announced. Now a month later, one would have to estimate what changes would be made to things there. Thus, getting accurate real-time values isn't realistic. Discounted Cash Flow is another approach one can take of valuing a company in terms of its future earnings computed back to a present day lump sum."
"Both models understand that the value of a company is the sum total of all cashflows in the future, discounted back to the present. They vary in their definition of ""cash"". The Gordon Growth model uses dividends as a proxy for cashflow, under the assumption that this is the only true cash received by shareholders. (In theory, counting cash is meaningless if there's no eventual end-game where the accumulated cash is divvied up amongst the owners.) The Gordon model is best used to value companies that have an established, reliable dividend. The company should be stable, and the payout ratio high. GG will underestimate the value of firms that consistently maintain a low payout ratio, and instead accumulate cash. There are multiple DCF models. A firm valuation measures all cash available to both equity and debt holders. A traditional equity valuation measures all cash that can be claimed by shareholders. While the latter seems most intuitive and pertinent to a shareholder, the former is very good at showing what a company can do regardless of their choice of capital structure. A small add-on to a firm valuation is the concept of EVA, or economic value add, where the return on capital (all capital -- both debt and equity) is compared to the blended cost of capital. The DCF model is more flexible (optimistic?) than the Gordon in its approach to cash. The approach can be applied to many types of companies, at every stage in their maturity, even if they don't pay a dividend. A simplistic, or single-stage DCF is similar to the Gordon. The assumption is that the company is fully mature, growing at a rate perhaps just slightly above inflation, forever. For younger companies a multi-stage DCF can be employed, where you forecast fairly confident numbers for the next 3-5 years, then 3-5 years beyond that the forecast is less certain, but assumed to be slowing growth, and a generally maturing, stabilizing company. And then the steady-state stage is tacked on to the end. You'll want to check out Professor Aswath Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ .
Our company gives the best business valuation services. If you want to any business valuation service, then you can come to our company website. When it comes to obtaining a business valuation, business owners are faced with a myriad of choices of the business valuation services. Kirk Kleckner valuation businesses need understanding and analysis of a variety of complex factors including detailed technical knowledge of value drivers and in-depth industry knowledge.
This article on seeking alpha: http://seekingalpha.com/article/112794-the-intrinsic-value-of-gold gives a quick overview, but it is also vague because gold can't be accurately priced. I wouldn't say that gold has zero intrinsic value because gold is not a business so traditional models are inappropriate, but I would say that gold *certainly * doesn't have a value of $1,500 and it's propped so high only because of investor expectation. In conclusion, I do not believe you can accurately state whether gold is undervalued or overvalued - you must make judgments based on what you think about the future of the market and of monetary policy, but there are too many variables to be accurate consistently."
Was a new law just passed that would hurt our ability to operate? Did a new competitor enter the industry to force us to change prices in order to stay competitive? If we have to charge less for our product, it stands to reason our earnings in the future will be similarly reduced. So what if the company's making more money now than it did when I bought the share? Presumably the company would then be more valuable. None of that is filtered my way as a ""part owner"". Yes it is, as a dividend; or in the case of a company not paying a dividend you're rewarded by an appreciating value. Why should the value of the shares change? A multitude of reasons generally revolving around the company's ability to profit in the future."
Let's think of our example earlier, where you, me, and Joe each own 33% at $300 total value. If suddenly another company wants to buy ALL of our equity for $600, then we're all pretty happy. Each of us will get $200. HOWEVER, let's say Joe hadn't come along. If that other company *then* made an offer for $600, we'd both get *$300* for the company. There's some other things about dilution too, such as the possible loss of control, but we'll save that for later. &gt; Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the ""best time""? It's VERY case specific. In *most* cases, depending on the industry, the company will be relatively a bit older, have both revenue and profitability, and a history of operations. In some cases, companies like this will choose to *never* go IPO (such as the Big 4 auditing firms, for one, among others). There are, of course, exceptions. Many smaller pharmacueticals are *pre-revenue* and are traded on the market. Tesla is getting revenue, but *not profitable* and it's on the markets as well. These are, naturally, riskier investments, but at least you've got liquidity to help a bit with that. When a private equity (PE) firm is looking to exit (sell their stake) through an IPO, they will try to engineer the company to be as attractive as possible to public investors. In fact, many PE firms will stipulate specific terms, and possibly get control of the company from the owner, when they initially invest. But there's a lot that goes into it. Perhaps /u/wreckingcru or /u/Seraphinic can go into a bit more detail on PE exits as while it's my chief interest and my career goal, it's not quite where I'm at *yet.*"
It is. The outstanding value is the net cash flow, but it will always be higher than cash outflow due to a constant growth rate/expected return. I was slightly confused when my manager told me to find the IRR before and after cash inflows (the whole life of the investment). Especially as IRR after cash inflows is higher than the former.
Talk to almost any large cap CFO or read any corporate finance textbook. McKinsey's Valuation is a great one to own: though yes McKinsey consultants can take a good idea and turn it bad by overdoing it to an extreme.  Why would universal corporate finance principles not apply to large cap tech? Why is having $XXb of unutilized cash for a company with durable cash flow a good thing for equity investors?
It is difficult to value a private company. Most of the valuations is based on how one feels the idea would translate into revenue in some future time. The VC firms take into account various factors to determine the price, but more often then not, its their hunch. Even VC don't make money on all picks, very few picks turn out to be stars, most picks lose money they have invested. Few picks just return their money. So if you feel that the idea/product/brand/people are great and would someday make good money, invest into it. Else stay away.
"In the long run (how long?) a shares price always reverts to being its proportional amount of the company's residual equity plus the net present value of its expected future cash flows. Or at least that's the theory. In practice PE ratio is used not as a way of measuring what the stock price itself will do but what the fundamental value of holding that share is compared to its price. It is a way of measuring what a company is worth compared to its price and comparing it against other companies to find companies where the underlying value of the company is underrepresented by the price. Comparing PE ratios within the same industry or sector is the most valid use for this (other than comparing previous years of the same company) and the validity of the comparison drops as the structure of the firm you are comparing with gets more different to that of the company. Each industry has its own ""typical"" average PE ratio and these differ wildly between industries so in a great many cases even comparing PE ratios between similar stocks in different industries isn't valid. Any weird pseudo PE ratio that you create for other instruments will be meaningless. In general the best way to compare investments across multiple instruments is by comparing returns. when comparing stocks to other instruments you may want to use the return on stock price or the return on capital employed (ROCE) depending on whether you want to compare the trading performance or the fundamental performance."
Again 0 &gt; not-zero. &gt;D) Society captures the majority of individual commercial efforts (estimates vary, but typically 85%). In other words, if I generate $10.00 of value as an entrepreneur, I will realistically be able to capture only $1.50 of that. D1: wat? Vague. Not all commercial efforts have a positive impact on the community. Irrelevant since we are talking about use vs cost. etc."
Without reading the source, from your description it seems that the author believes that this particular company was undervalued in the marketplace. It seems that investors were blinded by a small dividend, without considering the actual value of the company they were owners of. Remember that a shareholder has the right to their proportion of the company's net value, and that amount will be distributed both (a) in the form of dividends and (b) on liquidation of the company.  Theoretically, EPS is an indication of how much value an investor's single share has increased by in the year [of course this is not accurate, because accounting income does not directly correlate with company value increase, but it is a good indicator]. This means in this example that each share had a return of $10, of which the investors only received $1. The remainder sat in the company for further investment. Considering that liquidation may never happen, particularly within the time-frame that a particular investor wants to hold a share, some investors may undervalue share return that does not come in the form of a dividend. This may or may not be legitimate, because if the company reinvests its profits in poorer performing projects, the investors would have been better off getting the dividend immediately. However some value does need to be given to the non-dividend ownership of the company. It seems the author believes that investors failing to consider value of the non-dividend part of the corporation's shares in question led to an undervaluation of the company's shares in the market.
When it comes to apps, ideas have little value compared to the ability to execute on an idea. If you are not a developer, ask yourself what value you bring to the business besides having an idea. Can you test the value of this idea before it's an app? Is there a market for it? Do you have capital to invest in development, marketing, and production?
"Company values (and thus stock prices) rely on a much larger time frame than ""a weekend"".  First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks).  They look at performance over quarters and years to determine the ""value"" of a company.  They also look forward, not backwards to determine value.  Prior performance only gives a hint of what future performance may be.  If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits."
&gt;The labor theories of value (LTV) are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. (Wikipedia)  Note that it does not say that value is always _directly proportional_ to the labor needed, only that the labor needed is _related_ to the value. Ergo: labor does not _create_ value automatically, but value (when existing) is determined by labor, because someone will demand more for something that takes a lot of effort and/or time to create.
"To add to @keshlam's answer slightly a stock's price is made up of several components: the only one of these that is known even remotely accurately at any time is the book value on the day that the accounts are prepared. Even completed cashflows after the books have been prepared contain some slight unknowns as they may be reversed if stock is returned, for example, or reduced by unforeseen costs. Future cashflows are based on (amongst other things) how many sales you expect to make in the future for all time. Exercise for the reader: how many iPhone 22s will apple sell in 2029? Even known future cashflows have some risk attached to them; customers may not pay for goods, a supplier may go into liquidation and so need to change its invoicing strategy etc.. Estimating the risk on future cashflows is highly subjective and depends greatly on what the analyst expects the exact economic state of the world will be in the future. Investors have the choice of investing in a risk free instrument (this is usually taken as being modelled by the 10 year US treasury bond) that is guaranteed to give them a return. To invest in anything riskier than the risk free instrument they must be paid a premium over the risk free return that they would get from that. The risk premium is related to how likely they think it is that they will not receive a return higher than that rate. Calculation of that premium is highly subjective; if I know the management of the company well I will be inclined to think that the investment is far less risky (or perhaps riskier...) than someone who does not, for example. Since none of the factors that go into a share price are accurately measurable and many are subjective there is no ""right"" share price at any time, let alone at time of IPO. Each investor will estimate these values differently and so value the shares differently and their trading, based on their ever changing estimates, will move the share price to an indeterminable level. In comments to @keshlam's answer you ask if there is enough information to work out the share price if a company buys out the company before IPO.