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Valuation Using Multiples—What Is It and How Does It Work? Core Ideas Explained

Valutico

The ratio is either related to the Equity Value or ratios related to the Enterprise Value. . An example of an equity multiple: Price / Earnings. An example of an enterprise multiple: EV/Sales, EV/EBITDA, EV/EBIT and practically all non-financial multiples (e.g. EV/ARR, EV/barrel, EV/MW, EV/Click, etc).

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Your Guide to Valuing a Company Using the Multiples Approach

Valutico

The ratio is either related to the Equity Value or ratios related to the Enterprise Value. . An example of an equity multiple: Price / Earnings. An example of an enterprise multiple: EV/Sales, EV/EBITDA, EV/EBIT and practically all non-financial multiples (e.g. EV/ARR, EV/barrel, EV/MW, EV/Click, etc).

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Earnings and Cash Flows: A Primer on Free Cash Flow

Musings on Markets

Thus, we start with operating income or earnings before interest and taxes (EBIT) replacing net income. (I As a cash flow advocate, it pains me to say this, but if your game is pricing stocks, I see little benefit from replacing traditional multiples (like PE and EV to EBITDA) with free cash flow scaled pricing measures.