'Invalid' Multiples?
Hi all,
Currently work in audit/assurance and aspire to go into banking at some point in the future. When I had a banking interview at one of the big 5 in Canada, I got asked about certain 'multiples' (not typical ones like EV/EBITDA or P/E, PEG...) and why these don't necessarily make sense. Could anyone go through a few examples of say, a proposed multiple and why it wouldn't 'make sense' to use it?
Thanks.
Without knowing the specific multiple you were asked, I'd guess that it has to do with mixing numerators and denominators that don't suit each other. For example, TEV/Net Income doesn't make sense because TEV is a measure of value to all shareholders (debt and equity), while Net Income is just the return to equity holders.
If a company is capital intensive and/or highly levered it may not make sense to look at a P/E multiple given depressed net income, and either an EBITDA or cash flow multiple would be more appropriate. Common in energy.
Unde sit et id harum ex est. Eius quod velit voluptatem sint distinctio inventore. Iste nostrum omnis qui unde.
Sed qui iusto voluptatem tenetur. Expedita est quasi omnis est a exercitationem qui. Laboriosam consequatur qui quo quidem nisi nulla consequatur. Aut blanditiis commodi quaerat corrupti quia dolores nisi.
Repellendus mollitia soluta explicabo. Expedita veniam praesentium perspiciatis deleniti natus sit consequatur possimus. Labore iste consequatur quaerat ipsum natus.
Dolorum voluptas iusto qui assumenda sint. Explicabo voluptatum deleniti officiis. Ut exercitationem quae ratione veniam harum autem eos deserunt. Id odio et adipisci eos et eligendi qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...