Revenue multiples tend to be more stable over time and are less
affected by extraordinary items than earnings or, particularly, cash
flow. Therefore, they might more accurately present the company’s
long-term trend than any other measure and thereby be reliable for use
in valuations.
Changes in pricing policies, increased competition or strategic deci-
sions often affect revenues first, so revenues may also give a good
indication of the future situation for companies or industries in change.
Things to watch out for when using revenue multiples include sales vol-
atility, revenue
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