The purpose of this paper is twofold. First, test on a
sample of companies listed on the Milan stock exchange,
the effectiveness of the main multiples (price/earnings,
price/book value, price/sales, enterprise value/sales, enterprise
value/book value, enterprise value/EBIT, enterprise
value/EBITDA, enterprise value/free cash flow)
in determining of firm value. Secondly, analyze how factors
such as sector, size and year bias this outcomes.
The results show that the multiple based on cash flows
are almost always significant; the multiple based on
earnings are more significant in industrial sectors and
in particular for small firms and with many intangible
asset; the multiples on book value appear more effective
for non-industrial firms
