Comps Multiples Interview Questions
Hey folks, I've been tested with a few questions about multiples and wanted to understand them more fully:
1) There are two operationally identical companies. HighD has a high debt balance. LowD has low debt. Assume theis the same for both. Assume the market values both companies correctly. Which of the following is incorrect:
a) P/E is a preferable multiple to EV/these two companies.
b) Both companies will have an identical EV/multiple.
c) HighD will likely have a different PE multiple than LowD.
d) Both companies will have an.
e) Both companies will have identical.
2) Same setup. Identical companies, but one has more reinvestment. What can we say about the EV, EV/EBITDA,, and P/E?
3) Same setup. Identical companies, but one has longer useful life for its assets. What can we say about the EV, EV/EBITDA,, and P/E?
Hopefully this helps you guys out too!