Calculating the Relevant Multiple
Assuming the companies selected are reasonably comparable to the subject firm, then using the average (or median) multiple may be a reasonable estimate of the valuation multiple to apply to the subject firm. The P/E and P/B multiples for each of the comparable firms are stored in the pharma
object. For this exercise, calculate the average of each of those metrics.
This exercise is part of the course
Equity Valuation in R
Exercise instructions
- Print contents of
pharma
data object. - Calculate the average for all the metrics in
pharma
(i.e., columns 2 through 4) using thecolMeans()
command.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Show contents of pharma
___
# Calculate average multiples
multiples <- colMeans(___, na.rm = TRUE)
multiples