NISM Series XV : Research Analyst Certification Exam Notes
Page 52 Of 62
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EV = Value of Equity + Value of Debt - cash and cash equivalents
EV to Capital Employed ratio = Enterprise Value / Capital Employed (Total Equity + Total Debt)
Net asset value (NAV) of equity is the market value of an entity's assets minus the value of its liabilities. This is different from the book value or net-worth of equity as one is using the market value of asset (not book value of assets) to arrive at the NAV.
This valuation methodology is used in some businesses which are extremely assets oriented such as Real Estate, Shipping, Aviation etc.
Return on Capital/investment (ROI) is the comparison of returns with the investment and can be defined for single period as: Return on investment (%) = (Net profit / Investment) ? 100
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