Multiples Approach

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Definition of 'Multiples Approach'

A valuation theory based on the idea that similar assets sell at similar prices. This assumes that a ratio comparing value to some firm-specific variable (operating margins, cash flow, etc.) is the same across similar firms.
Investopedia Says

Investopedia explains 'Multiples Approach'

In other words, the theory is that when firms are comparable, we can use the multiples approach to determine the value of one firm based on the value of another.
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'Multiples Approach'

  • Top Things To Know For An Investment Banking Interview

    http://www.investopedia.com/articles/financialcareers/10/investment-banking-interview.asp
    ... There are three basic techniques to value a company: discounted cash flows
    (DCF), the multiples approach and comparable transactions. ...

  • Silver Wheaton In Review Before Earnings

    http://stocks.investopedia.com/stock-analysis/2011/Silver-Wheaton-In-Review-Before-Earnings-SLW-PAAS-AG-HL-SVM-ABX-GG1108.aspx
    ... In the mining sector, the multiples approach should not be used in isolation to
    compare companies, but should be used in conjunction with other approaches ...

  • Analyzing The Price-To-Cash-Flow Ratio

    http://www.investopedia.com/articles/stocks/11/analyzing-price-to-cash-flow-ratio.asp
    ... TUTORIAL: Ratio Analysis Calculating the P/CF Ratio P/CF multiples are calculated
    with a similar approach to what is used in the other price-based metrics. ...

  • CFA Level 1 Study Guide - Equity Investments - Using Price ...

    http://www.investopedia.com/exam-guide/cfa-level-1/equity-investments/using-price-multiples.asp
    ... 13.13 Technical Analysis; 13.14 Using Price Multiples. 14. ... 14.37 Bond Value and Price;
    14.38 Arbitrage-free Valuation Approach; 14.39 Typical Yield Measures; ...

  • Valuing Startup Ventures

    http://www.investopedia.com/articles/financial-theory/11/valuing-startup-ventures.asp
    ... are valued based on earnings, the value of startups often has to be determined based
    on revenue multiples. The market multiple approach, arguably, delivers ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Arbitrage ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/arbitrage-free-valuation-approach.asp
    ... 13.13 Technical Analysis; 13.14 Using Price Multiples. 14. ... 14.37 Bond Value and Price;
    14.38 Arbitrage-free Valuation Approach; 14.39 Typical Yield Measures; ...

  • The Equity-Risk Premium: More Risk For Higher Returns

    http://www.investopedia.com/articles/04/012104.asp
    ... In both the dividend-based approach and earnings-based approach, the dividend
    yield and earnings yield have reciprocal valuation multiples: ...

  • Portfolio Basics For The Beginner Investor - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0810/Portfolio-Basics-For-The-Beginner-Investor.aspx
    ... AAPL) is even larger but is growing faster and has richer multiples - making it
    a ... Model #1 - The Risk-Seeking Approach A risk-seeking investor is typically one ...

  • Valuing A Company Using The Residual Income Method

    http://www.investopedia.com/articles/fundamental-analysis/11/residual-income-model.asp
    ... One could opt to use a relative valuation approach, comparing multiples and metrics
    of a firm in relation to other companies within its industry or sector. ...

  • How To Value A Real Estate Investment Property

    http://www.investopedia.com/articles/mortgages-real-estate/11/valuing-real-estate.asp
    ... the region. This type of valuation approach is similar to using comparable
    transactions or multiples to value a stock. Many analysts ...

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