Primary Value Driver of Enterprise Value EV Multiple
1. EV/Sales: expected revenue growth
2. EV/EBITDA: expected growth in earnings before interest, taxes, depreciation, and amortization
3. EV/EBITA: expected growth in earnings before interest, taxes and amortization
4. EV/EBIT: expected growth in earnings before interest and tax
5. EV/FCFF: expected growth in free cash flow to firm
6. EV/TA: expected return on total assets
7. EV/BEV: expected return on book operating/invested capital (i.e. expected return on book enterprise value)
8. EV/FA: expected return on fixed assets
9. EV/TFA: expected return on tangible fixed assets.
Primary Value Driver of Pricing Multiple
1. P/EBT: expected growth in earnings before tax
2. P/E: expected growth in earnings (after tax)
3. P/FCFE: expected growth in free cash flow to equity
4. P/BV: expected return on book value (of equity)
5. P/ABV: expected return on adjusted book value (of equity).
Simple rule of “the higher the level of value driver, the higher the level of value multiple”
