Valuation Methodologies trading
comps questions with verified
solutions 2024-2025
Basic idea of trading comp, and how do we compare different
companies? - answer Look at similar companies and see what the
market is valuing their stock at. Then we find as many companies as
posible that are similar to our valued company and apply multiples.
This makes it that even if the similar companies have different EBIT
or NI, then we can still compare them
Factors to look at for comparables: - answer Growth rate, industry,
size of company, margin profile, and geography, or anything as long
as it sounds favorable
How many comparables do you want to - answer You want like an 8 -
10 comp group or more because you dont want one company to
skew the multipliers, but too many and some of them wont have
enough similarities
What is an Equity multiple? - answer A multiple that looks at equity
value and
Tech banking most common multiples: - answer Revenue multiples,
EBITDA multiples, and P/E multiples
When EBITDA multiple is negative what does that mean? - answer It
is invalid
Any profitability metric could be negative - answer Any profitability
metric could be negative, but negative NI companies would use
revenue multipliers
comps questions with verified
solutions 2024-2025
Basic idea of trading comp, and how do we compare different
companies? - answer Look at similar companies and see what the
market is valuing their stock at. Then we find as many companies as
posible that are similar to our valued company and apply multiples.
This makes it that even if the similar companies have different EBIT
or NI, then we can still compare them
Factors to look at for comparables: - answer Growth rate, industry,
size of company, margin profile, and geography, or anything as long
as it sounds favorable
How many comparables do you want to - answer You want like an 8 -
10 comp group or more because you dont want one company to
skew the multipliers, but too many and some of them wont have
enough similarities
What is an Equity multiple? - answer A multiple that looks at equity
value and
Tech banking most common multiples: - answer Revenue multiples,
EBITDA multiples, and P/E multiples
When EBITDA multiple is negative what does that mean? - answer It
is invalid
Any profitability metric could be negative - answer Any profitability
metric could be negative, but negative NI companies would use
revenue multipliers
