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Relative Valuation Methods with Price Multiples: Price-to-Sales Ratio Price-to-Cash Flow Ratio Price-to-Book Ratio What are the benefits and disadvantages...

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Finance

Relative Valuation Methods with Price Multiples:

  1. Price-to-Sales Ratio
  2. Price-to-Cash Flow Ratio
  3. Price-to-Book Ratio

What are the benefits and disadvantages of these methods?

Would you ever use any of them as stand alone valuation methodsof a target company?

Answer & Explanation Solved by verified expert
4.2 Ratings (932 Votes)
Price to sales Advantages 1 One can calculate for distressed firm because sales cant be negative 2 Sales revenue not easily manipulated 3 useful for mature cyclical and startup firm since it sales value is always there    See Answer
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