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How can the calculated risk factor, the figures mentioned in the cost of equity, and the discount to trading multiple be explained in more detail?
How can the calculated risk factor, the figures mentioned in the cost of equity, and the discount to trading multiple be explained in more detail?

Qualitative Assessment, Risk Factor Calculation, Cost of Equity Premium, Discount Trading Multiple, Explain, Explanation, Review, Subjective

Updated over 2 years ago

The Qualitative Assessment attempts to capture the highly subjective input of valuation experts, such as yourself, transparently about the company's risk. Therefore, you will see that weight is assigned to each line on the right side. This weight determines how much this single measurement affects the final risk.

The individual factors can be measured on a scale of 1 to 5 with 3 being our default value, which represents the average for the industry (or relative to the peer group). It is important to note that all these assessments are relative to your competitors and your industry, so a 4 means something very different for company size if you are rating a pharmaceutical company or if it is a restaurant.

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