Funding and Multiples valuation: Difference between pages

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1.
A method of business valuation which is based on:


Medium to longer term borrowing by a non-financial undertaking to meet its operational needs.
(i) a relevant measure; and


(ii) the ratio of value to that measure for a comparable business (or a comparable group of businesses).


2.


More generally, the provision or the sources of finance necessary for the continuing operation of an undertaking.  
The most widely used financial measure for this purpose for a mature business is accounting earnings.


In this context, sources of finance for non-financial organisations would include creditors, bank lenders, bondholders and shareholders.
For other types of businesses, relevant measures might include - for example - turnover, or numbers of subscribers.




3. ''Pensions.''
In simple terms, a lower multiple would indicate one or more of:
*weaker future growth prospects
*higher risk
*lower asset quality
*poorer management
*possible undervaluation


The provision in advance for future liabilities in a defined benefit pension scheme by the accumulation of assets.


 
Higher multiples would suggest better growth propsects, lower risk, better asset quality, better management or possible overvaluation.
4. ''Banking.''
 
In the banking context, sources of funding include retail customer deposits and equity, as well as wholesale and longer term borrowings.




== See also ==
== See also ==
* [[Defined benefit pension scheme]]
* [[Correction]]
* [[FFL]]
* [[Earnings]]
* [[Flighty]]
* [[Earnings multiples]]
* [[Funding liquidity risk]]
* [[Price to earnings ratio]]
* [[Funding management]]
* [[EBITDA multiple]]
* [[Funding ratio]]
* [[Shareholder value]]
* [[Liability funding risk]]
* [[Value driver]]
* [[MCT]]
* [[Net stable funding ratio]]
* [[Stability]]
* [[Sticky]]
 
 
===Other links===
[http://www.gtnews.com/Features/PDF/AFP_Guide_to_Global_Short_Term_Borrowing.pdf AFP Guide to Global Short Term Borrowing] ''gtnews.com''

Revision as of 11:04, 28 May 2017

A method of business valuation which is based on:

(i) a relevant measure; and

(ii) 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
  • poorer management
  • possible undervaluation


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


See also

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