Last week I wrote an article explaining the basics of valuation using a lemonade stand, and people seemed to like it.
So I wrote a follow-up on valuation multiples and how they relate to discounted cash flow formulas.
Basically: which multiples actually make economic sense, which ones are useful for valuation, which ones are better used only for comparisons, where they break down, etc.
The first article was more for beginners. This one is a bit more intermediate/advanced.
I find this topic weirdly fascinating because multiples are everywhere, but the underlying logic is rarely explained. Everyone talks about P/E, EV/EBITDA, P/S, P/B, PEG, etc., but a lot of the time it feels like people use them as magic numbers instead of as shortcuts for cash flows, growth, risk, margins and reinvestment.
It’s one of those things that feels foundational, but somehow nobody really teaches it clearly.
Anyway, I wrote about it here: [https://www.jeravalue.com/en/blog/valuation-multiples-lazy-dcfs](https://www.jeravalue.com/en/blog/valuation-multiples-lazy-dcfs)
