Technical Factsheet 167 - Valuing trading companies

A summary of the issues that need to be considered when engaged in the valuation of companies of all sorts by using an earnings-based approach. The calculations will give an indication of the valuation which the buyer/seller may consider rather than an exact figure. Covers the application of Price Earnings (P/E) ratios, EBITDA multiples and turnover multiples, discounted cash flow (DCF) approaches, including discount rates, terminal values and appropriate cash flows, the normalisation of earnings, how to deal with minority interests and briefly looks at those situations where an earnings-based approach is not appropriate. Download the full factsheet from 'Related documents'.