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How to Value a Startup

By Andrew Stotz

This story started when Dan, a podcast listener, replied to my recent weekly email with this question, “How do you value a startup, especially if there is no revenue?”

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what is quick ratio

What Is Quick Ratio?

By Andrew Stotz

The quick ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities with its most liquid assets.

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what is current ratio

What Is Current Ratio?

By Andrew Stotz

The current ratio or working capital ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities. Short term liabilities are debts or any obligation that is due within one year.

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what is risk assessment

What Is Risk Assessment?

By Andrew Stotz

Risk assessment is an evaluation method used to understand an investor’s risk rating which helps them come up with a suitable investment strategy to achieve their financial goals.

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what is the agency problem

What is the Agency Problem?

By Andrew Stotz

Within corporate finance, the agency problem is considered as the conflict of interest between the company’s managers and its stockholders.

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what is arbitrage pricing theory

What Is Arbitrage Pricing Theory?

By Andrew Stotz

The Arbitrage Pricing Theory is a method used to estimate the returns on assets and portfolios. It is a model based on the linear relationship between an asset’s expected risk and return.

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what is the modigliani miller theorem

What is the Modigliani–Miller Theorem?

By Andrew Stotz

The Modigliani-Miller Theorem suggests that a company’s capital structure and the average cost of capital does not have an impact on its overall value.

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what is the gordon growth model

What is the Gordon Growth Model?

By Andrew Stotz

The Gordon growth model, or GGM, is used to calculate the intrinsic value of a stock from future dividends. The model only works for companies that pay out dividends, which have a constant growth rate.

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what is modern portfolio theory

What is Modern Portfolio Theory and Portfolio Risk?

By Andrew Stotz

Modern Portfolio Theory is a theory presented in 1952 by Harry Markowitz on how risk-averse investors can create portfolios to maximize the return on investments based on the optimal levels of risk.

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what is stock valuation

What Is Stock Valuation?

By Andrew Stotz

Stock valuation is the process of determining the current (or projected) worth of a stock at a given time period. There are 2 main ways to value stocks: absolute and relative valuation.

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