Discussion Points:1. There are two major approaches to corporate valuation: a) using comparable firms (via multiples, i.e. ratios) and b) discounted cash flows based methods (FCF models, capital...

There are two major approaches to corporate valuation: a) using comparable firms (via multiples, i.e., ratios) and b) discounted cash flows-based methods (FCF models, capital budgeting metrics all fall into this category). Based on the case, which method (A or B above) do you find more useful? Briefly discuss relative strengths and weaknesses you can think of for both methods.
The Comparable Method
The comparable method is used to find ratio from industry, various peer organizations and similar companies in order to estimate the equity value of the company. These ratios are used for determining the P/E Ratio or Price-Earning Ratio, Price to Sales Ratio as well as the Enterprise Value to Earnings before Interest, tax, depreciation and amortization (EV/ EBITDA). These are called the multiples as Comparable method is also known as the Multiple Method. The concept behind the comparable method is that it is the law of ‘one price’. This means that the assets which are similar must be sold at same price. Therefore, the companies having similar revenues and earnings drivers must worth the same (James Chen, 2020).
Example: Suppose we want to estimate the equity value of a company which operates in office printing device...