The treasury stock method is used to calculate fully diluted shares outstanding. Typically, companies will tell you common shares outstanding and options outstanding in the MD&A section of their financial statements. Options give people the right to buy stocks at a specific price, also known as ...

The implied share price is the share price the company would be worth if all assumptions in the model are correct. However, it’s unrealistic to guess every assumption correctly, so we give a range of implied share prices by sensitizing a key variable such as WACC or perpetuity growth rate / exit m...

After the projection period, it can be assumed that the company is at a “mature” stage. To find the exit multiple, we can take the median EBITDA multiple from a set of mature comparables. These companies should be larger and more mature, and therefore have a lower EV / EBITDA multiple compared t...

Enterprise value is the value of the business, which is calculated as the total present value of free cash flows the company would obtain throughout its lifetime. Since we can only project cash flows reasonably for a limited number of years, usually 5-10 years, we have to calculate the value of the ...