DEFINITION of 'Earnings Multiplier'
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.
INVESTOPEDIA EXPLAINS '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.
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Analysts and investors should utilize a company’s financial statements, stock information websites and any number of analysis ... Read Full Answer >> 
What does the Dividend Discount Model (DDM) show an investor about a company?
The dividend discount model, or DDM, is not designed to be used in forecasting any possible capital gains from increases ... Read Full Answer >> 
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