Multiples Approach


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.

BREAKING DOWN '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.

  1. Operating Margin

    A ratio used to measure a company's pricing strategy and operating ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  3. Multiple

    A term that measures some aspect of a company's financial well-being, ...
  4. Intrinsic Value

    Intrinsic value is the actual value of a company or an asset ...
  5. Valuation

    The process of determining the current worth of an asset or company. ...
  6. Asset Valuation

    A method of assessing the worth of a company, real property, ...
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