ENTERPRISE VALUE MANAGEMENT

COMPANY VALUATIONS

 

 

EQUITY MARKET CAPITALIZATION

 

The valuations for most publicly trade companies are currently expressed as the equity market capitalization.

 

  • Share Price X Shares Outstanding

ENTERPRISE VALUE (EV)

 

Enterprise value is a more comprehensive measure of a company's total value. 

  • Market Capitalization + Debt + Minority Interest + Preferred Shares - Total Cash & Equivalents

EV more closely approximates the estimated total current value of a company in the event it would be acquired.  By adding in the debt, minority interest, and preferred shares a potential acquirer would be required to pay, and subtracting the cash that would reduce the cost of the acquisition, EV provides more transparency and understanding of the value of a company.

RISK GOVERNANCE 

FRAMEWORK™ (RGF)

RISK TRANSPARENCY helps leverage the principles of enterprise value and governance for key functional areas, processes, and risk areas.  Our Risk Governance Framework approach builds upon current entity strategic, operational, and risk management processes to transparently link and communicate entity value and risk areas to key strategic and operational objectives and related assets. 

 

Risk Governance is an emergent asset that unlocks and empowers increased and sustained enterprise value by culturally empowering enterprise-wide subject matter expert input, collaboration, and accountability. 

The differentiation and understanding between the levels of tangible assets (e.g., fixed assets such a machinery or current assets such as inventory) and intangible assets (e.g., patents, trademarks, goodwill and reputation value) are important to achieving risk transparency within an entity.   

 

 

MAJORITY OF ENTITY VALUE ASSIGNED TO

FUTURE PERFORMANCE (TRUST)

 

Intangible assets now represent approximately 80% of cooperate balance sheets.  Essentially 80% of the value of companies is being assigned to their ability to continue to perform and succeed vs. their underlying tangible assets. 

 

This makes it key for entities to understand and communicate the importance of providing confidence, assurance, and trust in their strategic direction and management capabilities to achieve performance targets.

The Chief Risk Officer and enterprise risk management function play key roles in contributing to the confidence, assurance, and trust necessary to ensure the entity pursues the right strategies.  Functional areas must also understand key vulnerabilities, potential disruptions, and risks that must be managed to achieve near-term performance objectives and longer-term resilience.

COMPANY FINANCIAL AND MARKET DATA ANALYTICS

Transparency Analytics™ sources fundamental and financial reporting data directly from each company's 10-Q and 10-K.  Fundamental history dates back to 2007 for United States based public companies.

Please refer to Risk Management Tools to review the FinancialData and Comps Example Templates.  These templates highlight the types of financial information that can be sourced by RISK TRANSPARENCY for your financial and Enterprise Value Management needs.

The Comps Example Template (No Macros Enabled) enables comparison of metrics and ratios for multiple companies.  Competitive data analytics can be leveraged to provides insights into:

 

The Comps Example Template also includes comparable valuations and benchmarking metrics and ratios including:

 

  • Enterprise Value and Market Values

  • Stock pricing, financial metrics, margins and growth rates

  • Returns, capital allocation, profitability, efficiency

  • Leverage, liquidity, solvency, and working capital

RISK TRANSPARENCY can develop and customize analytics and decision support tools to achieve your strategic and financial data analytics needs.

 

Transparency Analytics™ include research and data analytics of publicly traded company risk factors and risk governance structures to support your entity-wide risk and reward management objectives.