Wecan nowderive theenterprise value multiplesfor this
firm,usingtheequationsdevelopedintheprevioussection.
Letusbeginbyestimatingtheenterprisevalueforthisfirm,
usingthetwo-stagemodeldevelopedtoward theendofthe
last section.
Dividing this estimate of value by EBITDA, operating
income,bookcapitalandrevenuesyieldstheenterprisevalue
multiples for this firm:
Relationship between Multiples and Fundamentals
Intheprecedingsection,weusedafirmvaluationmodelto
back out the variables that determine each multiple and
providedasimpleillustrationwithahypotheticalcompany.In
thissection,weexploretherelationshipbetweenthefinancial
fundamentalsandeachoftheenterprisevaluemultiplesusing
the hypothetical company described in Illustration 9.2.
Growth Effect