What is it in finance?
Multiple access is the process of evaluating the company's assets. Investors use this approach to determine the attraction of the company's shares. Individuals can also use more companies for non -investment purposes to compare financial information. For example, this approach is common in comparing the margin of profits or cash flows. This analysis is often specific to the only business industry or sector and measures the strength of each company in the overall market. Profit per share is calculated that net income is less dividends divided by average unpaid shares. This allows investors to know how much money the company can invest back in operations to generate more value in the future. Multiple approach this award one step further. Investors will divide the current price of shares for the latest profit per share of a lined company. The result will be a number known as a multiple that helps investors estimate the future price of the company's shares. For example, a multiple of 12 and future profits per share inThe $ 2.50 USD (USD) will indicate that the stock price should increase to $ 30. Investors will then determine whether multiple approach is suitable for estimating future stock prices or decreases.
Access more allows investors to compare the potential growth of the values of different companies on the overall market. The multiple also shows whether the company is higher or lower than similar companies, which can lead to fewer investors to see the company's shares as a worthy investment. For example, a multiple of 12 companies is less favorable if the average multiple of industry 15 is.
Individuals-as investors, as well as habitat-moors using more access to evaluation of companies by means of gross profit measurement to use multiple approaches. This allows comparison of companies in the method outside the stock price. Gross profit ratio with the beginningIt makes it less divided by selling the goods sold. This multiple approach helps to show how much money the company remains to cover the operating costs and parties in the company. This number allows comparison of companies in different industries, making it more attractive than a multiple of shares. Comparison of gross profit is crucial for determining whether companies can remain competitive and in business for future years.