Financial Valuation: Case Study Approach - Fina...
Finance-Financial Valuation: Case Study Approach - Final Exam Notes
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Question 1 Multiples Analysis
a) Compare/ Contrast Different Multiples
To value the whole firm the ratio of total firm value to op. Y would be: Total Value/ Operating Income (Pre Tax) Ie (Value of D, V of E + Value of all other secys)/Op. Y Earnings Multiple: P/E Ratio P/E * Net Y Where P/E= P of stock/EPS Advantages One of the most widely used methods of valuation Its simplicity Disadvantages Leading multiples (next year's expected earnings), need estimates of all comparable firm's expe...
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