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| A method of business valuation which is based on:
| | ''Accounting.'' |
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| (i) a relevant measure; and
| | Profit After Tax. |
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| (ii) the ratio of value to that measure for a comparable business (or a comparable group of businesses).
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| The most widely used financial measure for this purpose for a mature business is accounting earnings.
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| For other types of businesses, relevant measures might include - for example - turnover, or numbers of subscribers.
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| In simple terms, a lower multiple would indicate one or more of:
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| *weaker future growth prospects
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| *higher risk
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| *lower asset quality
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| *poorer management
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| *possible undervaluation
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| Higher multiples would suggest better growth propsects, lower risk, better asset quality, better management or possible overvaluation.
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| == See also == | | == See also == |
| * [[Earnings]] | | * [[Earnings]] |
| * [[Price to earnings ratio]] | | * [[PBT]] |
| * [[EBITDA multiple]] | | * [[NBT]] |
| * [[Shareholder value]]
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| * [[Value driver]]
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Revision as of 10:45, 14 November 2015
Accounting.
Profit After Tax.
See also
