5
Ratio-based valuation
What topics are covered in this chapter?
Classification of multiples
Finding your multiple
Different multiples
How to find input data for multiple valuations
Summary
Ratio-based valuations are frequently used by valuation experts, managers
and investors. In ratio-based valuation (also called multiple-based valuation),
the value of the company is expressed in relation to a specific variable such
as sales, EBIT (earnings before interest and tax), net earnings or book value.
A ratio and a multiple refer to the same number but the terms are usually
used in different contexts: ratio is the result of a
division, value/variable = ratio; multiple is a term
in a multiplication, variable × multiple = value.
Classification of ...