What is the 'Earnings Multiplier'
The earnings multiplier is an adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used to discount future earnings, and allows investors to compare expected growth to an amount of money invested over the same period at current rates.
Next Up
BREAKING DOWN 'Earnings Multiplier'
The earnings multiplier is similar to a discounted cash flow in that future earnings are rolled back to determine how much they are worth in today's dollars. Investors use the earnings multiplier to figure out how much a company is worth, today, based on how it is expected to grow in the future.
RELATED TERMS

Deposit Multiplier
A function that describes the amount of money created in a bank's ... 
Equity Multiplier
The ratio of a companyâ€™s total assets to its stockholderâ€™s equity. ... 
Forward Price To Earnings  Forward ...
A measure of the pricetoearnings ratio (P/E) using forecasted ... 
Investment Multiplier
The term investment multiplier refers to the concept that any ... 
Accounting Earnings
The amount of money a company has earned during a given period, ... 
PriceEarnings Ratio  P/E Ratio
The PricetoEarnings Ratio or P/E ratio is a ratio for valuing ...
Related Articles

Markets
Equity Multiplier
The equity multiplier is a straightforward ratio used to measure a companyâ€™s financial leverage. The ratio is calculated by dividing total assets by total equity. 
Markets
What's a Multiplier?
A multiplier attempts to measure the effect of aggregate spending over time. 
Investing
Comparing the P/E, EPS And Earnings Yield
Here are three ratios that help investors value stock returns. 
Investing
Discounting With The Discount Rate
The discount rate is the interest rate you need to earn on a given amount of money today to end up with a given amount of money in the future. Let's say you need $1,000 one year from now to go ... 
Investing
Beware False Signals From The P/E Ratio
The P/E ratio is a simple tool for evaluating a company, but no one ratio can tell the whole story. 
Investing
How To Find P/E And PEG Ratios
If these numbers have you in the dark, these easy calculations should help light the way. 
Markets
Why Are Global Markets Freaking Out? A Markets Explainer
Stock markets around the world are off to their worst year ever, but understanding what stocks are will take the mystery out of their movements. 
Investing
Is Stock With a Lower P/E Always A Better Choice?
Is a stock with a lower P/E always a better investment than a stock with a higher one? The short answer is no, but it depends on a few things. 
Investing
Explaining Forward PricetoEarnings Ratio
The estimated P/E of a company is often used to compare current earnings to estimated future earnings. 
Markets
What are Earnings?
The amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year.
RELATED FAQS

What is the difference between the deposit multiplier and the money multiplier?
Explore the deposit multiplier and the money multiplier, two fundamental concepts of Keynesian economics, and learn how they ... Read Answer >> 
How does monetary policy affect a bank's deposit multiplier?
Find out how the Federal Reserve uses monetary policy to impact the deposit money multiplier for American banks, including ... Read Answer >> 
How can I use the equity multiplier to determine if a stock is a good investment?
Find out how investors use the equity multiplier ratio in fundamental analysis to determine whether a given stock is a solid ... Read Answer >> 
Which is better: A high or low equity multiplier?
Learn about the equity multiplier, how it is calculated, what it measures and why a low equity multiplier is preferred to ... Read Answer >> 
Why is the multiplier effect associated with Keynesian economics?
Learn what the Keynesian multiplier effect is and how it provided a justification for increased government spending in the ... Read Answer >> 
What does a large multiplier effect signify?
Find out more about the multiplier effect, what it measures and what a large multiplier effect indicates about an economy. Read Answer >>