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1 point The method of comparables applies also to enterprise value multiples, such as the EV/EBITDA multiple - that is, a benchmark of EV (enterprise value) to EBITDA (earnings before interest, taxes, depreciation, and amortization). In this application, multiplying an EV/EBITDA benchmark multiple times an estimate of a company's EBITDA provides a quick estimate of the value of the entire company, and we would be evaluating the market value of an entire company in relation to some measure of value relevant to all providers of capital, not only providers of equity capital. To arrive at an estimate of equity value or per-share value, we would first need to adjust for the claim of debt against that wholecompany value. If Company D has estimated EBIT of $100 million, depreciation & amortization of $20 million, 20 million shares outstanding, debt with a market value of $50 million and the peer-group comparison suggests the appropriate EV/EBITDA multiple is 5.0, the total equity value is estimated as and the per-share price would be estimated as per share. valuation of an asset based on the multiples of (such as a peer-group comparison). For example, multiplying a benchmark value of the price-to-earnings (P/E) multiple by an estimate of a company's earnings per share (EPS) provides a quick estimate of the value of the company's stock that can be compared with the stock's market price. If Company A's EPS is $1.50 and an examination of benchmark firms in a peer-group comparison suggests a P/E of 22 is appropriate, we will estimate that an appropriate price for Company A's stock is ... that is, - Similarly, multiplying a benchmark value of the price-to-sales (P/S) multiple by an estimate of a company's sales figure can provide an estimate of the company's stock value. If company B has one billion shares outstanding and revenue of $5 billion, and the peer-group comparison suggests a P/S of 3.2 is appropriate, we will estimate that an appropriate price for Company B's stock is - that is. The price-to-book (P/B) multiple can be used in a similar way. If the benchmark for Company C, based on the peer-group, is P/B=85.0, and Company C's balance sheet shows $900 million in total assets, $500 million in total liabilities, no preferred stock and eight hundred million shares of common stock outstanding. we will estimate that an appropriate price for Company C's stock is _ that is, II 85.0 times (900 million mns 800 million) divided by 500 million