Series 79 practice questioneasyComparable Company Analysis
Which of the following is the most commonly used enterprise value multiple in comparable company analysis?
- AEV/Revenue
- BEV/Net Income
- CEV/Book Value
- DEV/EBITDA✓ Correct answer
Explanation
Why D — EV/EBITDA
EV/EBITDA is the most widely used enterprise value multiple in investment banking because EBITDA is capital-structure neutral, tax-neutral, and eliminates differences in depreciation policies. This makes it ideal for comparing companies across different capital structures and tax jurisdictions. EV/Revenue is commonly used for high-growth or unprofitable companies, while EV/Net Income is not a standard metric since net income is an equity-level measure.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 477+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Collection, Analysis & Evaluation of Data questions
- An investment banker is valuing a SaaS company with no positive EBITDA. Which valuation multiple would be most…
- An analyst notices that one comparable company trades at an EV/EBITDA multiple significantly above its peers. Upon…
- An analyst is building a comparable company analysis and must choose between using LTM (last twelve months) and NTM…
- When conducting a comparable company analysis, which of the following criteria is LEAST important in selecting peer…