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Summary of chapter 25 : Enterprise value and financial securities
 
  The value of a group’s equity and debt lies in the value of its operating assets. Since operating assets are financed exclusively by means of shareholders’ equity and net debt, we get:
Value of operating assets = Value of net debt + equity value
By definition, debts are remunerated independently of the company’s results, they always have a repayment date, and in the event of bankruptcy, they get priority for repayment over shareholder’s equity. On the basis of these three features, debts can be distinguished from shareholders’ equity which is remunerated on the basis of the company’s results, repayment is never guaranteed and, in the event of bankruptcy, shareholders are repaid after creditors, which more often than not means they never get anything!

There are three ways of valuing operating assets:
- by discounting cash flows, i.e. the flows on cash generated by operating assets at the rate of return required by investors;
- by using methods which compare the operating assets of companies with similar levels of risk, earnings and growth. The valuation ratios of these comparable companies, preferably the the EV/EBIT and EV/NOPAT ratios, can be determined and then be applied to the parameters of the company to be valued;
- by the option model, which is rich in concepts but hard to apply practically.

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