Techniques for Conducting Company Analysis and Stock Valuation Assignment - 2

Techniques for Conducting Company Analysis and Stock Valuation - Assignment Example Using comparables entails the use of an organization’s earnings in the process of valuing and organizations stock as well as analysis. Earnings also referred to as the net income or net profit, are the remaining amount after a firm settles all of its outstanding bills. In stock valuation and company analysis, there are earnings per share (EPS) which entails the measurement of earnings in coming up with an apples-to-apples comparison. To find the value of earnings per share, the expert analyzing the company divides the divides the dollar amount of the reported earnings of a corporation the currently outstanding number of shares in the enterprise.  Free cash flow techniques are the most common measurement used by experts, among other investment bankers, for valuing stock as well as analyzing public and private companies. This is in contrary to the fact that the majority of individual investors lack the knowledge of cash flow. Cash flow is simply the amount of money flowing thr ough a company during the business trading period or the company’s activities, usually a quarterly or a year, after doing away with fixed expenses. At times cash flows are referred to as earnings realized before interest, taxation, decreasing and accounting of an account as well as depreciation.  Options-based techniques entail the analysis of the company as well as the valuation of its stock as an alternative approach since it takes full consideration of the risks associated with a venture. While considering these risks, they recognize the ability of firms to postpone a venture until a later time or rather engage in a partial investment.