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B. The Peers Multiples Method

The theoretical ground of the peers multiples method is as follows: comparable companies should have similar value when adjusted for the “size of their operations” as measured by certain financial ratios. In the following, we will detail the example of two widely used valuation multiples, specifying each time the underlying hypotheses that shall be made in order to obtain a relevant valuation of the target company.

The Online Course

Finding business ideas General Concepts
Resources
Strategy Analysis Porters analysis
   -The industry and its different players
   -Barriers to entry and new entrants
   -Substitution products
   -Suppliers
   -Customers
   -Complementary products

SWOT Analysis
   -Strengths
   -Weaknesses
   -Opportunities
   -Threats
The role played by strategy analysis in the construction of your business plan
Practical Accounting The balance sheet
The income statement
The cash flows statement
Financial Analysis Wealth creation
   -Commercial profit
   -Production
   -Gross Profit
   -EBITDA
   -EBIT
   -Profit before taxes and nonrecurring items
   -Net nonrecurring income
   -Net Income
   -A note on operational leverage and breakeven point

Investments
   -Analyzing capital expenditures
   -Analyzing the working capital of a company

Financing
   -Debt ratios (Current ratio, quick ratio and cash ratios)
   -Liquidity ratios and solvency

Profitability
   -Return on equity (ROE)
   -Cost of equity
   -Return on Capital Employed (ROCE)
   -Weighted Average Cost of Capital (WACC)
   -Leverage effect and relation between ROE and ROCE
   -Investment decisions: Present Value and Net Present Value
Devising and revising a business plan
Fundamental marketing concepts Introduction
A few technical concepts
   -The potential rate
   -The conversion rate
   -Average lifetime value of customers
   -Analytic example
Business Valuation: when to invest or divest your money The DCF method
The peers multiples method
-The EBITDA multiple
-The P/E ratio
A few words in conclusion