Valuation Terms
Multiple
A ratio used to compare price or value to a business metric such as earnings, sales, or cash flow.
Also called: valuation multiple
What it means
A multiple is a shorthand valuation ratio. Examples include price-to-earnings, price-to-sales, enterprise-value-to-EBITDA, and price-to-book. Multiples help compare companies quickly, but they can oversimplify important differences.
Why it matters
Users will see multiples constantly in finance, so it helps to know they are comparison tools, not complete valuation answers.