Perhaps a very simple question for some.
If one knows how to evaluate the company in terms of it’s balance sheet, cash flow statement and income statement – as well as reading 10-Qs etc etc, then how does one find the right price to buy?
It is certainly possible to buy a great company at a bad price.
Would I be on the right lines if I mentioned something about evaluating the company’s net equity and then applying a certain multiple, and then comparing to other companies? I have also heard that you could project the future FCF of a company and then somehow reverse-engineer what the theoretical value of the company could be in the future?
It would be great if someone could shed some light into how to properly value a business, so far I only look at P/S and P/B, but I feel there is a lot more that one could do.