Valuation multiple is a financial indicator used to assess the value of a company or its shares based on certain economic parameters. This multiple is calculated as the ratio between the value of the company (or its shares) and a selected financial metric, such as earnings, revenue, or equity. For example, the P/E ratio (price-to-earnings ratio) compares the market price of a share with its earnings per share, while the P/B ratio (price-to-book ratio) compares the market price of a share with its book value. Valuation multiples help investors assess whether a company is overvalued or undervalued in relation to its financial performance and market standards.
- Financial dictionary
Valuation multiple
Valuation multiple
Related terms
| Term | Definition |
|---|---|
| Venture capital | Venture capital (VC) is a form of financing where investors provide capital to early-stage companies or innovative projects with high growth potential. It is a risky investment because these companies are often in the early stages of development. However, in case of success, they promise high returns. Venture capital funds typically acquire an equity stake in the company and participate in its management and strategy. |
| Volatility | Volatility is a measure of the fluctuation in the price or returns of an investment asset over time. High volatility means that the price of the asset can change significantly in a short period, indicating a high level of risk and uncertainty. In contrast, low volatility means that the price of the asset moves relatively steadily. Volatility is often measured using the standard deviation or variance of the asset's historical returns. In the investment world, volatility is an important factor in assessing risk and can influence investment decisions and portfolio management. |
| WAULT | WAULT (weighted average unexpired lease term) is an indicator that represents the average time remaining until the expiration of lease agreements in a property portfolio. This metric is calculated as a weighted average of the lease durations, based on the rent and the area of individual properties. WAULT provides insights into the stability of rental income and the long-term security of an investment in commercial real estate. A higher WAULT indicates a longer period for which tenants are bound by lease agreements, which can contribute to greater stability and predictability of income. |
| Wealth manager | A wealth manager is a financial professional who provides comprehensive wealth management services to affluent individuals or families. They focus on investment planning, asset protection, retirement security, tax optimization, and estate planning. The goal is to achieve long-term growth and protection of the client's wealth. |
| Weight of a fund | The weight of a fund in the context of an investment portfolio refers to the percentage share of a specific fund in the total value of the portfolio. This indicator determines what portion of the investment funds or capital is allocated to a particular fund. The fund's weight influences the overall risk and performance of the portfolio, as funds with higher weight have a greater impact on the overall performance and volatility of the portfolio. Properly setting the weight of the funds is crucial for achieving investment goals and managing risks. |