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Earnings Multiplier: It is a kind of price-earnings ratio.
The PE ratio is one of the figures which serves as a gauge of a company’s financial health. It may, in fact, be useful to compare the PE ratios of different companies, in an attempt to determine where investments should be made.
A relative valuation model also referred
to as comparable valuation, is a very useful and effective tool in valuing an asset. Relative valuation involves the use of similar, comparable assets in valuing another asset. There's an old business adage that says an asset is only worth what the next guy is willing to pay for it. The effectiveness of comparable valuation is that the process specifically relies on the value of other assets that have been bought or sold. Investopedia went onto say a similar and effective approach can be utilized with respect to stocks. A stock is a share in a business and the fundamentals of the underlying business can be used to determine the value of similar stocks. Some of the most common and useful metrics to utilize in relative valuation include
price to earnings ratio return on equity
operating margin
enterprise value price to free cash flow
Liquidation Value: Liquidation value is the total worth of a company's physical assets if it were to go out of business and the assets sold. The liquidation value is the value of company real estate,
fixtures, equipment, and inventory. Intangible assets are excluded from a company's liquidation value.
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