Drivers of price to book equity multiple

 · [Show full abstract] to book value is the best standalone price multiple for the Asian economies (India, China and South Korea) while price to earnings does a Author: Asheesh Pandey.  · It can also be shown that the PE multiple is driven by (1 – g/ROE) / (r – g) where r is the cost of equity, g is the growth rate, and ROE is return on equity Return on Equity (ROE) Return on Equity (ROE) is a measure of a company’s profitability that takes a company’s annual return (net income) divided by the value of its total shareholders' equity (i.e. 12%).Estimated Reading Time: 5 mins. Introduction. Among the most familiar and widely used valuation tools are price and enterprise value multiples. Price multiples are ratios of a stock’s market price to some measure of fundamental value per www.doorway.rurise value multiples, by contrast, relate the total market value of all sources of a company’s capital to a measure of fundamental value for the entire company.

Multiples reflect the average price of a company when compared to a value driver, in this case EBITDA. They should be used as a benchmark and not to calculate the value of the company, in the same way the average price of a used car should be used as a benchmark, but not to price the specific car. Industry specific multiples are the techniques that demonstrate what business is worth. To evaluate the estimate of the value of the business one can use financial ratios such as: EV to EBIT and EBITDA (earnings before interest, taxes, depreciation, and amortization) EV to owners’ equity. One can use different combinations of these financial. What Price-To-Book Ratio (P/B Ratio) Can Tell You. The P/B ratio reflects the value that market participants attach to a company's equity relative to the book value of its equity. A stock's market.

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