Earnings multiple is a method , put in a crude way, take the earnings
(define what is earnings? ) and multiply by a number ( where do u get
the number from? ) and that is the value!., How simple it looks !.
BUT why should u think that it reflects value?
You are taking current earnings? and multiplying it by some number!.
Will any one like to hazard a guess? why it is considered as
"reflecting value"? Are there any assumptions behind it?
Suppose my current earnings is zero or negative. Then what is the
value? bigger zero!. What will the seller do then?
(define what is earnings? ) and multiply by a number ( where do u get
the number from? ) and that is the value!., How simple it looks !.
BUT why should u think that it reflects value?
You are taking current earnings? and multiplying it by some number!.
Will any one like to hazard a guess? why it is considered as
"reflecting value"? Are there any assumptions behind it?
Suppose my current earnings is zero or negative. Then what is the
value? bigger zero!. What will the seller do then?