Approaches for Price/earnings Ratio Adjustment

Abstract

The paper is focused on some specifics of the application of the market approach. The International Valuation Standards (2020) require appraisers to adjust the market multiples used. These adjustments should reflect the differences in the operational and financial characteristics of selected comparable and the evaluated enterprise. We establish the existence of intuitive and non-intuitive approaches to the market multiples adjustment. We compare the results of applying both approaches to the Price/Earnings, P/E.