Multiples
Hello, I asked chatgpt to give me the full list of multiples that are used in finance, and wanted to what ya'all think
Comprehensive list of financial multiples along with a brief explanation of their use and formula:
- Price-to-Earnings Ratio (P/E Ratio): Use: It compares a company's stock price to its earnings per share, providing insight into the market's valuation of the company's earnings. Formula: P/E Ratio = Market Price per Share / Earnings per Share
- Price-to-Sales Ratio (P/S Ratio): Use: It compares a company's stock price to its revenue per share, indicating how the market values the company's sales. Formula: P/S Ratio = Market Price per Share / Revenue per Share
- Price-to-Book Ratio (P/B Ratio): Use: It compares a company's stock price to its book value per share, providing information on how the market values the company's assets. Formula: P/B Ratio = Market Price per Share / Book Value per Share
- Dividend Yield: Use: It measures the annual dividend payout as a percentage of the stock price, indicating the return generated by dividends. Formula: Dividend Yield = (Annual Dividend per Share / Market Price per Share) * 100
- Return on Equity (ROE): Use: It measures a company's profitability relative to shareholders' equity, indicating how efficiently the company utilizes equity to generate profits. Formula: ROE = (Net Income / Shareholders' Equity) * 100
- Debt-to-Equity Ratio: Use: It compares a company's total debt to its shareholders' equity, providing insights into the company's leverage and financial risk. Formula: Debt-to-Equity Ratio = Total Debt / Shareholders' Equity
- Earnings per Share (EPS): Use: It represents the portion of a company's profit allocated to each outstanding share of common stock, indicating profitability on a per-share basis. Formula: EPS = Net Income / Number of Outstanding Shares
- Price-to-Cash Flow Ratio (P/CF): Use: It compares a company's stock price to its cash flow per share, providing information on the market's valuation of the company's cash flow generation. Formula: P/CF Ratio = Market Price per Share / Cash Flow per Share
- Enterprise Value-to-EBITDA (EV/EBITDA): Use: It compares a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA), helping assess its value relative to its earnings and debt. Formula: EV/EBITDA = Enterprise Value / EBITDA
- Price-to-Free Cash Flow (P/FCF): Use: It compares a company's stock price to its free cash flow per share, providing insight into the market's valuation of the company's cash flow generation. Formula: P/FCF Ratio = Market Price per Share / Free Cash Flow per Share
- Price/Earnings to Growth Ratio (PEG Ratio): Use: It considers the P/E ratio in relation to the company's expected earnings growth rate, helping evaluate the stock's value relative to its growth prospects. Formula: PEG Ratio = P/E Ratio / Earnings Growth Rate
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