- Welcome to Relative Valuation!
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This section gives a brief introduction to relative valuation and presents the basic idea behind this simple yet powerful valuation method.Book: 1Quiz: 1
This section briefly shows the relation between enterprise value and equity value and shows how we can use relative valuation to derive these values. It also takes a closer look at what "enterprise value" actually is.Book: 1Quiz: 1
- In this section, we address the three key challenges we face when conducting relative valuation: How to pick multiples? Which ones are the "right" comparables? And what are comparable valuation situations?Book: 1Quiz: 1
This section takes a closer look at the P/E ratio, the most popular valuation multiple among financial analysts. We show how to derive the P/E ratio from a simple valuation model. This allows us to better understand the (implicit) assumptions we make when working with the P/E ratio. We also see that many other multiples are a function of the P/E ratio.Book: 1Quiz: 1