Ways You Can Use Property Valuation To Become Irresistible To Customers

Having to rely on on cash flows will talk about the disadvantages and advantages that toward the end of the video but let’s get into this so let’s say you’ve got whiz-bang technologies they’re going public so because they’re not publicly traded yet we don’t wavelike a stock price or something that we look at work trying to estimate that we want to estimate whiz-bang value so that we know what’s a good price to pay for it and all we know right now is with bangs earnings per share is a dollar fifty seven alright so there are earning a dollar.

Fifty seven this year but hey great thing is that we got this humdrum industries this is going to be our comp this is a comparable firm we say you know what their they have a lot this humdrum industries has a lot in common with was being and so we can use them Asa compliment firm as a benchmark to estimate the price for whiz-bang and we do know the share price of humdrum it’s thirty dollars in ninety-four cents share and we also know their earnings and their earnings per share is two dollars and thirty eight cents a shares now.

we can calculate their PE ratio so let’s calculate that so we’ve got the p/e ratio here it’s going to be the thirty dollars and ninety-four cents / two dollars and and that’s going to give us so that’s our price-to-earnings ratio for tundra right now let’s come up to whiz-bang with was being if we were to say well they should have the same p/e ratio but we don’t know with bangs price right here right we don’t know that part so we’ll leave that blank for right now but we do know the denominator we do know earnings right so we’ve got this dollar and the denominator right so we know that this price earnings ratio assuming that this is a valid comp this humdrum industries we can just plug in this right hereon so now all have.

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