Business valuation

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October 5, 2018 at 7:50 pm #476565
snehadavis
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Business valuation/Pe ratio limitation sept 2016 specimen /qn 20
In the solution it is stated that pe ratio is suited to value the shares of listed co.But actually is it suitable for unlisted co?
October 6, 2018 at 11:50 am #476609
John Moffat
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Yes it is – we would use the PE for similar listed companies and apply that to the earnings of the unlisted company.

However, to reflect the fact that shares in unlisted companies are not so easily traded, we would reduce the PE that we use.
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