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You are trying to find the value of the network of Sam's Clubs stores and you are considering using Costco as a comparable. You must

You are trying to find the value of the network of Sam's Clubs stores and you are considering using Costco as a comparable. You must choose from a variety of available multiples.

For example, you might use a sales multiple, an EBITDA multiple, or a Value/Store multiple. Think about what type of multiple might prove best or most accurate:


1) Under what circumstances might a firm value/store ratio taken from Costco's firm value relative to its number of stores provide an accurate valuation of Sam's Clubs?

2) Under what circumstances might an EBITDA multiple provide a more accurate answer?

3) In general, how do you choose which multiple is best?

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