Multiples valuation: Difference between revisions

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Higher multiples would suggest better growth propsects, lower risk, worse asset quality or possible overvaluation.
Higher multiples would suggest better growth propsects, lower risk, worse asset quality, or possible overvaluation.





Revision as of 19:05, 4 June 2015

A method of business valuation which is based on a relevant measure and the ratio of value to that measure for a comparable business (or a comparable group of businesses).

The most widely used financial measure for this purpose for a mature business is accounting earnings.

For other types of businesses, relevant measures might include - for example - turnover, or numbers of subscribers.


In simple terms, a lower multiple would indicate one or more of:

  • weaker future growth prospects
  • higher risk
  • lower asset quality
  • possible undervaluation


Higher multiples would suggest better growth propsects, lower risk, worse asset quality, or possible overvaluation.


See also


Other links