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undemanding multiples

English translation: not exacting multiples

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17:26 Jun 27, 2003
English to English translations [PRO]
Bus/Financial
English term or phrase: undemanding multiples
Stock analysis

Under our base assumptions, the deal will be modestly value enhancing[...] Hana's ability to create an attractive transaction for Seoulbank's acquisition is constrained by its current ]]]undemanding multiples (P/BV of 1.1x 2002). The merger will be value enhancing only if Hana pays less than 1.1x 2002 P/BV, under our current assumptions.

Can you explain me the meaning of "undemanding multiples" and the acronym P/BV?

Thanks.
Marco Oberto
Italy
Local time: 06:27
English translation:not exacting multiples
Explanation:
P/BV is price/book value.

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Note added at 2003-06-27 17:44:39 (GMT)
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Or better price to book ratio.

The explanation ist -
Price-To-Book Ratio
A ratio used to compare a stock\'s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter\'s book value (Book value is simply assets minus liabilities).



A lower Price-To-Book Ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware this varies a fair amount by industry.

This ratio also gives some idea of whether you\'re paying too much for what would be left if the company went bankrupt immediately.

Also known as the price/equity ratio.

http://www.investopedia.com/terms/p/price-to-bookratio.asp


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Note added at 2003-06-27 17:46:57 (GMT)
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After a strong market rally in April investors will now focus on economic fundamentals, although UK equities valuations remain undemanding.

http://www.bosinvestment.co.uk/pages/investdetspec

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Note added at 2003-06-27 17:53:02 (GMT)
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Undemanding multiple is has a wider range than an usual multiple.

--------------------------------------------------
Note added at 2003-06-27 17:54:28 (GMT)
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Sorry for is.
Undemanding multiple has a wider range than an usual multiple.

--------------------------------------------------
Note added at 2003-06-27 17:59:00 (GMT)
--------------------------------------------------

Enterprise Multiple (EV/EBITDA)
A ratio used to determine the value of a company. The enterprise-multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include

http://www.investopedia.com/terms/e/ev-ebitda.asp

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Note added at 2003-06-27 18:13:28 (GMT)
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Price/Earnings Multiple—the price of a share of stock divided by its earnings per share.
As exapmle of a ratio.
Selected response from:

Jarema
Ukraine
Local time: 07:27
Grading comment
Thank you all (I also appreciated Ralf's precision).
4 KudoZ points were awarded for this answer

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Summary of answers provided
4 +2not exacting multiples
Jarema
4nondetermining financial ratios
R. A. Stegemann
4low valuation ratio(s)
Ralf Lemster
1 +1price/book value
jccantrell


Discussion entries: 2





  

Answers


13 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +2
not exacting multiples


Explanation:
P/BV is price/book value.

--------------------------------------------------
Note added at 2003-06-27 17:44:39 (GMT)
--------------------------------------------------

Or better price to book ratio.

The explanation ist -
Price-To-Book Ratio
A ratio used to compare a stock\'s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter\'s book value (Book value is simply assets minus liabilities).



A lower Price-To-Book Ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware this varies a fair amount by industry.

This ratio also gives some idea of whether you\'re paying too much for what would be left if the company went bankrupt immediately.

Also known as the price/equity ratio.

http://www.investopedia.com/terms/p/price-to-bookratio.asp


--------------------------------------------------
Note added at 2003-06-27 17:46:57 (GMT)
--------------------------------------------------

After a strong market rally in April investors will now focus on economic fundamentals, although UK equities valuations remain undemanding.

http://www.bosinvestment.co.uk/pages/investdetspec

--------------------------------------------------
Note added at 2003-06-27 17:53:02 (GMT)
--------------------------------------------------

Undemanding multiple is has a wider range than an usual multiple.

--------------------------------------------------
Note added at 2003-06-27 17:54:28 (GMT)
--------------------------------------------------

Sorry for is.
Undemanding multiple has a wider range than an usual multiple.

--------------------------------------------------
Note added at 2003-06-27 17:59:00 (GMT)
--------------------------------------------------

Enterprise Multiple (EV/EBITDA)
A ratio used to determine the value of a company. The enterprise-multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include

http://www.investopedia.com/terms/e/ev-ebitda.asp

--------------------------------------------------
Note added at 2003-06-27 18:13:28 (GMT)
--------------------------------------------------

Price/Earnings Multiple—the price of a share of stock divided by its earnings per share.
As exapmle of a ratio.

Jarema
Ukraine
Local time: 07:27
Native speaker of: Native in RussianRussian, Native in UkrainianUkrainian
PRO pts in pair: 16
Grading comment
Thank you all (I also appreciated Ralf's precision).

Peer comments on this answer (and responses from the answerer)
agree  mary bueno
15 mins

agree  Marie Scarano
16 hrs
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14 mins   confidence: Answerer confidence 1/5Answerer confidence 1/5 peer agreement (net): +1
price/book value


Explanation:
This is only a guess.

However, the undemanding multiple would be this 1.1x, meaning that it is NOT out of line.

jccantrell
United States
Local time: 21:27
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 840

Peer comments on this answer (and responses from the answerer)
agree  Deborah Shannon: Or maybe here the P/BV ratio is the baseline valuation, and the "undemanding multiples" are some other, not very impressive, rates of return on that value.
4 hrs
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7 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
nondetermining financial ratios


Explanation:
The below link opens to a PDF document and financial report. Enter a FIND command for the word "multiple". It will take you to a note provided at the bottom of a table.

The entries marked with an X represent financial ratios. The entries marked with a W represent Korean won (the name of Korean currency)

Financial ratios represent a broad category of ratios used to measure the overall health of a firm. At least one chapter is devoted to them in any introductory text to corporate finance.

For example, P/E is the price to earnings ratio. Price (P) and earnings (E) alone are interesting to know, but the ratio (multiple) P/E tells you just a little bit more. Same with price (P) and book value (BV) in the ratio (multiple) P/BV.

Undemanding in this context would simply mean that other factors exist that are considered more important in making the financial decision.





    Reference: http://www.hanabank.com/info/data/ir/analyst/01_11_12Daewoo....
R. A. Stegemann
Saudi Arabia
Local time: 13:27
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 132
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13 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
low valuation ratio(s)


Explanation:
As was explained in previous answers, "multiples" is a common term for financial ratios used to get a grip on the relative valuation of a share. P/E (the ratio of the market price to earnings per share) is most commonly used, but depending on the type of company, P/BV (market price to book value) might be more interesting to look at. (This would be the case with a company that isn't very profitable, but has a lot of substance on its balance sheet.)

The point that ABN Amro are trying to get across in their study is that the proposed deal (which has, of course, materialised) would have made sense for Hana Bank's shareholders only if they paid less than 1.1 times SeoulBank's book value (see table 10 - The Dilution Factor - on page 13: "Number of new shares at no discount to Hana's shares **assuming 1.0x paid for Seoulbank's book for W500bn**).

HTH - Ralf

The problem referred to here is that Hana Bank offered its own shares as consideration for the acquisition of SeoulBank (while other competitors made a cash offer). Therefore, the attractiveness of the bid was determined by the value of Hana Bank's shares: given the state of the Korean banking sector, P/E wasn't really applicable - people analysing bids therefore had to consider the book value of Hana Bank's assets.

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Note added at 13 hrs 42 mins (2003-06-28 07:09:52 GMT)
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Grrrr... didn\'t show the second URL I entered:
http://www.hanabank.com/info/data/ir/analyst/02_08_02ABN.pdf


    Reference: http://edition.cnn.com/2002/BUSINESS/asia/08/19/korea.hana.b...
Ralf Lemster
Germany
Local time: 06:27
Native speaker of: German
PRO pts in pair: 377
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