Hi everyone! Can anyone explain to me how we derive the formulae for justified price multiples (leaving out those for trailing and leading P/E ratios)? i was going through the scheweser material for the same but i could not grasp how they derived the formulae from the Gordon growth model…
Could you expand on your question?
Ankita: Try CFAI books. They are go way deep into this. By justified, i think, they primarily means use the DDM one way or another. Been long since I did that.
oh right… i should have done that first… thanks!