alleryStart learning →Guideline companies trade at an average P/E of 12. The subject firm earns Rs 5 crore. What value follows?
ARs 17 crore
BRs 2.4 crore
CRs 60 crore
DRs 7 crore
Answer & Solution
Correct answer: C. Rs 60 crore
Applying the average multiple to earnings gives 12 x Rs 5 crore = Rs 60 crore.
Keep practising Business Valuation
Browse all Business Valuation questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
How is marketability of a business interest defined?A controlling interest is defined as an investor acquiring more than what share of a compaWhich level of value is lowest for equity interests in a private firm?A buyer pays a 100% control premium over the minority price. What is the implied minority A private firm valued using listed-peer multiples is usually adjusted for what?In the guideline public company method, the comparison with listed firms is expressed as wWhy is the asset-based approach weak for a going concern?Why do some critics doubt the objectivity of the WACC method?