Valuation
Determining business/asset worth.
Formula
Earnings Multiple Valuation = Net Profit × Price/Earnings Ratio
Real World
When Disney acquired Marvel in 2009 for $4 billion, analysts debated the valuation method used — some argued Marvel's brand and IP made asset-based valuation far too low, favouring an earnings multiple instead.
Exam Focus
For 'evaluate' questions on valuation, state which method is used, then assess its limitations given the specific business context.
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