10 Questions
What does the PEG ratio capture?
The relationship between earnings growth and P/E ratio
How is the PEG ratio interpreted?
P/E per unit of expected growth
What advantage does the PEG ratio offer in valuation?
It standardizes the P/E ratio for stocks with different expected growth rates
Why can comparisons using the PEG ratio be difficult?
The relationship between P/E and growth is not linear
When are enterprise value multiples considered more appropriate to use?
When analyzing mergers and acquisitions
What is the most commonly used enterprise value multiple?
EV/EBITDA
What does the EV/EBITDA multiple measure?
The proportion of enterprise value to operating cash flow
Which component is included in the calculation of enterprise value (EV)?
Market value of common stock
What is EBITDA calculated as?
EBIT + depreciation + amortization
Which enterprise value multiple is recommended for capital-intensive industries?
EV/Invested Capital
This quiz covers the calculation of Price-to-Earnings (P/E) ratio using retention and growth rates, as well as the concept of Price/Earnings-to-Growth (PEG) ratio. Explore the relationship between earnings growth and valuation multiples.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
