I'm going to explain four major
valuation metrics here, and how you can use them to improve your investment results.
Not exact matches
For example you could say, «Our competitor with similar
metrics recently got financed at a $ 20 million pre-money
valuation,
here is why I think we're better...» Setting terms to the investor by saying something like, «I won't take less than this
valuation» is the surest way to turn off a potential investor.
Knowing how stocks are priced historically relative to some
metric like earnings or cash flows is far more instructive than knowing whether stocks are at an all time high or not (we've addressed the predictive utility of stock
valuations in several posts, including
here and
here).
I might do a deeper analysis of the numbers on the income and balance sheet later, but
here are some basic
valuation metrics: