What does the 'football field' valuation graph represent?

What does the 'football field' valuation graph represent?

• A. A chart showing the range of values across different valuation methodologies
• B. A graph of stock price movements
• C. A histogram of deal sizes
• D. A projection of future cash flows

Answer: (A)

The football field graph shows the range of valuations produced by different valuation methods. It presents horizontal bars for each method (like comparable company analysis, precedent transactions, and discounted cash flow), with the length spanning the low to high value that method yields. This lets you see how widely estimates vary and where a deal price sits relative to those ranges. Often you’ll see both enterprise value and equity value ranges, sometimes with a central point highlighted as a best estimate. This isn’t about stock price movements, a histogram of deal sizes, or a projection of cash flows. It’s a quick visual of how much valuation estimates differ across methods, helping assess whether a proposed price is reasonable within the spread of methodologies.

The football field graph shows the range of valuations produced by different valuation methods. It presents horizontal bars for each method (like comparable company analysis, precedent transactions, and discounted cash flow), with the length spanning the low to high value that method yields. This lets you see how widely estimates vary and where a deal price sits relative to those ranges. Often you’ll see both enterprise value and equity value ranges, sometimes with a central point highlighted as a best estimate.

This isn’t about stock price movements, a histogram of deal sizes, or a projection of cash flows. It’s a quick visual of how much valuation estimates differ across methods, helping assess whether a proposed price is reasonable within the spread of methodologies.