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What Is Stock Valuation?

Andrew Stolz

The DDM method allows you to value a company by looking at the sum of all the future dividend payments that have been discounted back to the net present value. . Relative valuation compares a stock value to its competitors and peers within the same industry. The most popular ratio is the price to earnings ratio.

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M&A Valuation Methods: Your Essential Guide with 7 Key Methods

Valutico

Analysts use financial metrics and multiples such as Price to Earnings (P/E), Price to Book (P/B), Enterprise Value to Sales (EV/Sales), Enterprise Value to EBITDA (EV/EBITDA), and Price to Book (P/B) ratios derived from trading data of similar public companies or deal pricing data of similar M&A transactions.

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The Role of Financial Projections in Business Valuation

Equilest

Market-Based Valuation Market-based valuation methods determine the value of a business by comparing it to similar companies in the market. The Comparable Company Analysis (CCA) compares key financial ratios and multiples, such as price-to-earnings (P/E) ratio or enterprise value-to-sales (EV/S) ratio, of similar publicly traded companies.

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M&A Terms Every Business Owner Should Know

Class VI Partner

Discount Rate Discount Rate refers to the rate at which a stream of future cash flows is discounted to determine Net Present Value. Multiple of Earnings Multiple of Earnings, similar to Multiple of EBITDA, refers to the multiple of a company’s earnings to establish the entity valuation of the company.