Aswath Damodaran
speaker
1,201 appearances
7 recordings
3 series
first heard May 2025
last heard 7 Aug
Aswath Damodaran’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 6 in all, peaking in Nov 2025 with 2.
Appearances
When you have cross-holdings, here's the problem.
If you have minority holdings in other companies, your market value reflects those holdings.
Because the market knows you own 30% of this very valuable company.
So what happens is your market cap inflates, your enterprise value is higher, but your ebit does not include the earnings from that cross-holding.
Because it's viewed as a non it's viewed as non-operating.
It shows up below the Ebit DA line.
So I say with even with enterprise value to EBITDA, you should be netting out the value of the crossholdings because otherwise you inflate the you think that these companies are more expensive than they are because the EV is inflated by including them, but the EBITDA does include it.
And people say that's a pain in the neck.
And I say, welcome to reality.
A lot of re a reason people like to use multiples, it's the shortcut, right?
You're not asking the in-depth questions you need to ask to value a company.
Say, I need a shortcut.
And that shortcut historically has been the PE ratio.
But for 20 years, I've argued the P ratio is the most dangerous of all multiples to use because it's this mess, right?
There's a numerator that's just the market value of equity, and a denominator includes everything.
It includes interest income from cash.
What if you're making a huge interest income from cash and you're including it and that's part of your denominator?
You're mixing up a business with a cash holding and in this case a cross holding and you're trying to come up with a consolidated multiple.
So w the lesson I think that you get by looking at the Google and the alphabet is don't trust net income.
Net income is a deadly number at these companies because the mess that goes into it.
Showing 201–220 of 1,201 · page 11 of 61
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