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    Price To Earnings - : Valuation Multiples

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    Andrianarivelo Mihoby Safidy 1820352
    Valuation multiples are commonly used to value companies based on financial metrics. The document discusses several common valuation multiples including price to earnings (P/E), price to book value, price to sales, EV to EBITDA, and EV to sales. Each multiple compares different financial metrics such as stock price, earnings, or enterprise value to determine the value that markets have assigned to each unit of the company's financial performance. The multiples provide a range of typical values used for valuation comparisons.

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    Price To Earnings - : Valuation Multiples

    Uploaded by

    Andrianarivelo Mihoby Safidy 1820352
    16 views1 page
    Valuation multiples are commonly used to value companies based on financial metrics. The document discusses several common valuation multiples including price to earnings (P/E), price to book value, price to sales, EV to EBITDA, and EV to sales. Each multiple compares different financial metrics such as stock price, earnings, or enterprise value to determine the value that markets have assigned to each unit of the company's financial performance. The multiples provide a range of typical values used for valuation comparisons.

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    Valuation multiples are commonly used to value companies based on financial metrics. The document discusses several common valuation multiples including price to earnings (P/E), price to book value, price to sales, EV to EBITDA, and EV to sales. Each multiple compares different financial metrics such as stock price, earnings, or enterprise value to determine the value that markets have assigned to each unit of the company's financial performance. The multiples provide a range of typical values used for valuation comparisons.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    16 views1 page

    Price To Earnings - : Valuation Multiples

    Uploaded by

    Andrianarivelo Mihoby Safidy 1820352
    Valuation multiples are commonly used to value companies based on financial metrics. The document discusses several common valuation multiples including price to earnings (P/E), price to book value, price to sales, EV to EBITDA, and EV to sales. Each multiple compares different financial metrics such as stock price, earnings, or enterprise value to determine the value that markets have assigned to each unit of the company's financial performance. The multiples provide a range of typical values used for valuation comparisons.

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    Valuation Multiples

     Price to earnings – P/E is one of the most commonly used valuation metrics,
    where the numerator is the price of the stock and the denominator is EPS. Note that the
    P/E multiple equals the ratio of equity value to net Income, in which the numerator and
    denominator are both are divided by the number of fully diluted shares. EPS figures may
    be either as-reported or adjusted as described below. P/E multiples are often in the
    range of 15.0x to 30.0x.
     Price to Book value - The price-to-book ratio, or P/B ratio, is a financial ratio used to
    compare a company's current market price to its book value. The calculation can be performed
    in two ways, but the result should be the same each way. In the first way, the company's market
    capitalization can be divided by the company's total book value from its balance sheet. The
    second way, using per-share values, is to divide the company's current share price by the book
    value per share.

     Price to sales ratio - The price-to-sales (P/S) ratio is a valuation ratio that
    compares a company’s stock price to its revenues. It is an indicator of the value
    that financial markets have placed on each dollar of a company’s sales or
    revenues.

     EV-EBITDA - EV/EBITDA is one of the most commonly used valuation metrics, as


    EBITDA is commonly used as a proxy for cash flow available to the firm. EV/EBITDA is
    often in the range of 6.0x to 18.0x.

     EV-SALES - When a company has negative EBITDA, the EV/EBITDA and EV/EBIT multiples will not be
    material. In such cases, EV/Sales may be the most appropriate multiple to use. EV/Sales is commonly
    used in the valuation of companies whose operating costs still exceed revenues, as might be the case
    with nascent Internet firms, for example. However, revenue is a poor metric by which to compare
    firms, since two firms with identical revenues may have wildly different margins. EV/Sales multiples
    are often in the range of 1.00x to 3.00x.

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