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INVESTMENT BANKING / FREE CHEAT SHEET

The valuation fundamentals cheat sheet.

A concise reference to enterprise value, equity value and financial statements, with a worked example and common traps. Free to read, print and keep.

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upliftVALUATION / 01

THE THREE DISTINCTIONS THAT MATTER

Know which value you mean.

01

Enterprise value (EV)

The value of a business's operations to its capital providers. Often approximated using EV/EBITDA multiples or a discounted cash flow calculation.

02

Equity value

The value attributable to shareholders. Simplified bridge: Equity value = Enterprise value − Debt + Cash. Real transactions include debt-like and cash-like adjustments.

03

The worked bridge

EV £500m − gross debt £120m + excess cash £40m = equity value £420m.

04

Connect the statements.

Income statement: earnings over a period. Balance sheet: assets, liabilities and equity at a point in time. Cash flow statement: movements in cash from operations, investing and financing.

05

Watch for the traps.

EBITDA is not cash flow. EV is not equity value. Debt may bring cash with it. Leases, minority interests, non-operating assets and deal-specific adjustments may matter.

Ask yourself: Is this number measuring operations, shareholders' value or cash?

Illustrative educational examples only. Figures are fictional and simplified; not investment advice or a substitute for transaction-specific analysis.

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