Valuation Multiples: A Primer |
This document explains how to calculate and use
multiples commonly used in equity analysis.
This document is intended to be a reference manual
for the calculation of commonly used valuation
multiples. We explain how multiples are calculated and
discuss the different variations that can be employed.
We discuss the differences between equity and enterprise
multiples, show how target or ‘fair’ multiples can be
derived from underlying value drivers, and discuss the
ways multiples can be used in valuation. For each
multiple, we show its calculation and derivation from
underlying DCF fundamentals, discuss its strengths and
weaknesses, and suggest appropriate use. pdf |