corp fin - Comparable tran Analysis

on page 284 of cfa textbook could someone please explain from where those weights are coming in the middle of the page? Would those be given in the exam? thank you

can you please reference the weights…do not have books on me but think I understand this fairly well…thx

weights are given to eps , cfper share, book value per share and sales per share which are 20% each except for cf per share which is 40%. it says that Hofer has decided to overweight cashflow per share . The text used the weights to calculate them to the estimated takeover value based on comparables…

i think the weights will be given otherwise how are we suppose to calculate them.

they would have to give you that on the exam. There is no set weighting. All the examples I have done so far use a mean value of all comparables ratios, then you multiply that out using the target’s data, and find a mean value from there. So I guess if they give you weightings, weight them accordingly and if not, use the mean. IMO.

i agree with you normally you would take an simple average, but i can see certain industries weighting certain ratios higher than others

don’t worry about the weights, I’m sure they will be given because they depend on the model and get calibrated to the comparable firms.

thank you

hitting corporate finance with question bank for the next two hours.