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QuestionsCategory: Valuation QuadrantWhich valuation ratios to use?
Nigel asked 5 months ago

Hi guys,
I followed the webinar last Saturday but got a little lost at the part on valuation ratios. Between the 3 example companies CDL, Hour Glass and Dutch Lady, how do you decide which valuation ratio to use for each?

Jieren Zheng replied 5 months ago

I would think CDL, an asset heavy company would be a Price-to-Book, Hour Glass and Dutch Lady would probably be PE I think.

1 Answers
Victor Chng answered 5 months ago

Hi Nigel,

It is as what Jieren had mentioned above. PB for asset heavy company while PE for those earnings based type of company.

P/CF is use only when cash flow is twice the net profit for earnings based type of company.