Question

Drag the tiles to the correct boxes to complete the pairs.

Match the different methods used for calculating a company’s final intrinsic value to the formulas used for calculating them.

Answer 1

The different methods used for calculating a company’s final intrinsic value use the following formulas for calculating them:

• net earnings / number of outstanding shares = earnings per share (EPS)

• market value of each share / earnings per share =  price earnings rate (PE)

• net operating profit after taxes = net operating profit after tax (NOPAT)

• an average percentage the company pays to raise capital = weighted average cost of capital  (WACC)

• net operating Incomes after tax - (capital x weighted average cost of capital) = economic added value model (EVA)