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2 comment(s). Last comment by houseofordos 2013-12-07 18:45
Posted by houseofordos > 2013-12-07 18:45 | Report Abuse
-ve enterprise value means net cash per share more than share price... if the company is not tightly held... will be targetted by corporate raiders who can privatize the company for free...
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CS Tan
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
sense maker
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Posted by sense maker > 2013-12-07 17:52 | Report Abuse
EVM is widely used by businessmen looking to acquire a controlling stake in a company because net cash or debt affects their financing or cash flow planfor the acquired company post-acquisition.
But there is a pitfall small investors should be aware of when using it. There are some companies that sit on big cash for decades without making dividend distribution. Companies with very high net cash per share, some higher than market price per share, would have negative or < 1 EVM, although their profitability gauges are super low (like ROE, ROA).