The Right Role for Multiples in Valuation
McKinsey on Finance, No. 15, pp. 7-11, Spring 2005
5 Pages Posted: 28 Sep 2005
Discounted cash flow valuations are the best way to assess the value of projects, but they are only as accurate as the forecasts behind them. A careful review of a company's multiples - and those of its competitors - can help verify those underlying forecasts. However, executives must be critical consumers of published multiples and probe unexpected differences.
Keywords: Valuation, Multiples, Comparables
JEL Classification: G30, G34
Suggested Citation: Suggested Citation