Earnings Multiplier Estimation: Direction of Change Approach

The Direction of Change Approach to Estimating an Earnings Multiplier

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Question

The direction of change approach to estimating an earnings multiplier involves

Answers

A. inferring the direction of change in the multiplier based on derivations of the specific estimates for its ten major components.

B. inferring the direction of change in the multiplier based on predictions for changes in its three major components.

C. inferring the direction of change in the multiplier based on derivations of specific estimates for its three major components.

D. inferring the direction of change in the multiplier based on predictions for change in its ten major components.

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Explanations

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A. B. C. D.

The direction of change approach begins with the current earnings multiplier and estimates the direction and extent of change for the dividend payout ratio and the variables that influence the required rate of return and the growth rate of dividends and earnings.

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