Glossary

Sounds precise, is a judgement. Old stock sits at full cost until someone writes it down.

Fast and widely used, and it cannot tell you when an entire category is mispriced. Pair it with a reverse DCF.

A five-star restaurant and a highway dhaba are both "restaurants". Only one of them is a peer of the other.

Turns "is this a good company?" into "can this company grow 25% a year for ten years?" — a far more answerable question.

Read it for what it does not cover. It speaks to the ratio, not to whether the transaction is a good idea, and the qualifications in its language usually carry more information than its conclusion.

Tax treatment usually drives the choice: an aggressive hybrid is taxed as equity, a conservative one as debt. With balanced advantage funds the rules vary enormously, so read the methodology rather than the category name.

Serviceable on a liquid stock because another trade is a second away. On a suspended one it decays silently while being displayed in the same font as every live price.

Read it as an evacuation plan rather than a weather forecast. It does not say a fire is coming; it says how long the building takes to empty, which is a fact about the building and was measurable the whole time.

The real measure of how big a company is. Share price alone tells you nothing.

The only sane denominator for a cyclical. Trailing earnings get the answer wrong at both ends of the cycle, confidently.

Choose it before you look at the multiples, or you will unconsciously pick the ones that make your stock look cheap.

The output is a spread rather than a figure, and the spread is the honest answer. A DCF quoted to the rupee is a claim the model cannot support.

It shows up as the trade you would otherwise have skipped and the stop you abandon. Checking a portfolio last thing at night pairs the worst state with the worst available actions.

Not automatically a bad investment. It is a specific bet that the story survives long enough to become numbers.

It leaves solvency untouched and hands liquidity to somebody else to decide. A company can be worth far more than it owes on every valuation and still fail on a date.

The anchor of a lender’s valuation, because its assets are financial and its return is earned on the capital base. For a business whose value sits in brands or people it says very little.

It generally begins where nobody is looking — rates falling, earnings recovering from a depressed base, valuations low because everybody gave up. Anyone telling you which innings we are in is describing a feeling.

Your required return. Change it by two points and the valuation moves by a third.

A consequence rather than a choice, and quite separate from the discount rate a valuation calls a required return. Where it exceeds what your capacity for loss permits, the quantities that can move are the contribution, the target and the date — never the allocation.

A floor rather than a valuation. Useful where the assets could actually be sold; close to meaningless for a business whose value walks out of the building each evening.

The dividing line the OCI section is organised around. Gratuity remeasurements and revaluation surplus never come back; a translation or hedge reserve is only parked, waiting for a disposal or settlement date the business does not choose.

The route almost every Indian group restructuring takes. Where a listed company is involved the exchanges and the securities regulator see it first, and the filed documents contain the valuation reports, the swap ratio and the appointed date.

The question is never whether the decline is real but how fast it is and whether it is accelerating, because the rate sits in the denominator of the valuation.