Definitions

Corroborating Analytics
A series of calculations to verify an investment’s financial statement portrayal is representative of the investment’s valuation and assumptions.

DCF Discounted Cash Flow Valuation (modified)
The modified discounted cash flow valuation method takes traditional discounted cash flow and adjusts it for differences between WACC and equity return; the valuation modification enables DCF valuations to match EBITDA valuations and adhere to the Treble Equity Return standard. See the Research discussion.

Earnings to Deployed Equity (EDE)
A comparative valuation metric for comparing the wealth formation potential across the broad spectrum of investment opportunities. See the Research discussion.

EBITDA
An income statement formula calculating Earnings Before Interest Taxes Depreciation and Amortization—the bottom-up approach to calculating pre-asset operating performance.

EBITDA Growth rate
The EBITDA Growth rate is the compounding average periodic growth rate of EBITDA beyond period one. For a given EBITDA Multiple, the growth rate is not explicitly found anywhere. The growth rate must be iteratively solved. For a peer group of companies, the rate represents the expected marketplace growth of their EBITDA. The EBITDA Growth rate is the key insight to linking EBITDA and DCF valuations and understanding the marketplace's economic value influence on EBITDA Multiple calculations. The marketplace influence is now distilled into an objective tangible outcome for a valuation's consideration, acting as part of a definitive feedback mechanism.

EBITDA Multiple
An EBITDA multiple (Enterprise Value/EBITDA) is a financial metric that compares a company or companies' total value (debt plus equity, minus cash) to its annual earnings before interest, taxes, depreciation, and amortization. It acts as a valuation tool to project an average group valuation down to a specifc investment opportunity.

Equity Statement
Accounting's fourth of four primary financial statements. The dedicated validating purpose of the statement is to indicate debit entries equal credit entries.

Iterative Polynomial
An iterative polynomial is a mathematical technique that repeatedly applies a polynomial function, using the output of one step as the input for the next, to approximate roots of the equation x_n+1 = P(x_n) that converges to a solution, Line [7]; the approximate root of the equation is found when Line [8] equals zero.

Operating Performance (pre asset)
Operating performance is operating revenues, less operating expenses. Operating performance’s operating expenses exclude interest expense, income taxes, depreciation and amortization. The excluded expenses are distinguished as post-asset expenses; thus, operating performance is generated on an operating based pre-asset basis. The present value of top-down generated operating performances and of bottom-up referenced EBITDAs represent equal pre-asset amounts. 

Operating Performance (proxy)
An Operating Performance proxy represents a non-varying periodic operating performance equivalent; an Operating Performance proxy is similar to that of a home or auto periodic payment, containing both a return 'on' and return 'of' component.

Primary Financial Statements, Four
Accounting's four core primary statements of balance sheet, income, cash flow, and equity.

Research discussion
A 40-page research paper decribing how to generate a viable valuation outcome, including the matching of EBITDA and DCF valuations. The paper's replacement valuation architecture centers around three essential elements: concept, structure, and method. See peerinside.com's main menu for access.

Return on Equity (ROE), time value accrual
The accrual equity return’s time value calculation divides an investment’s net income present value by its outstanding equity present value. The accrual time value equity return is one of the three equity returns in the Treble Equity Return standard.

Treble Equity Return Standard
The sought equity return risk profile of WACC matches the investment’s equity cash IRR and accrual equity ROE returns. The Treble Equity Return standard is what indicates debits are equal to credits and enables DCF and EBITDA valuations to match.

WACC
Weighted Average Capital Cost—average cost capital cost inclusive of pre-tax equity return and debt cost.