/ is one of the most commonly used financial ratios when valuing a company, used in conjunction with / Revenue and P/E. In essence, it is the measure of the true value of a company ( ) in relation to the profitability of the company ( ).
/ is written as a multiple and takes the form of something like 5.3 x.
Due to the fact thatis used, this metric ignores capital structure (how the company is financed) and therefore can be used between companies regardless of their Debt / ratios.
/ is taken in terms of financial years (after ), usually for 2 historical and 2 projected years.
- Comparable Analysis
- Earnings Before Interest, Taxation, Depreciation & Amortization (EBITDA)
- Enterprise Value (EV)
- Precedent Transactions
- Public Comparable Companies
- Trading Multiple