Questions and Answers
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?
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When are enterprise value multiples considered more appropriate to use?
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What is the most commonly used enterprise value multiple?
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What does the EV/EBITDA multiple measure?
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Which component is included in the calculation of enterprise value (EV)?
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What is EBITDA calculated as?
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Which enterprise value multiple is recommended for capital-intensive industries?
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