Market-Based Valuation: Price and Enterprise Value Multiples
Free CFA Level II lesson in Equity Valuation. 13 min read, ~1,885 words.
Justified leading P/E = (1-b) / (r-g), trailing P/E has an extra (1+g) in the numerator. Justified P/B = (ROE-g) / (r-g), above 1.0 signals value creation, below 1.0 signals destruction. P/B = P/E x ROE, this identity lets you derive any one from the other two. EV/EBITDA is capital-structure...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- market based valuation
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