PE Ratio to Implied EV?
Just curious, is it common for people to use the PE ratio to get the implied EV, assuming you know the amount of cash and debt the company, etc?
Thanks
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No... not common, not sure why you would ever do that... why wouldn't you just add net debt (which you have) to the equity market cap instead?
use the PE ratio to get MVE/Mkt Cap, not implied EV
Yeah, why not do it... though definitely not common
used in ipo models. when looking at potential IPO of a company, you look at P/Es of comps, take sector average, look at average leverage across sector (after IPOing, market will allow to have this much leverage) and compute EV/EBITDA from there (which can be used as your lbo exit multiple - in case IPO is a exit route)
Thanks all.
1) Right, I have the number for market cap, and I can just add net debt. I wasn't thinking right before.
2) What does MVE/Mkt Cap tell you?
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