The name given for the argument common among Star Trek fans about who would win in a starship battle between Captains Kirk, Picard, and Archer.
Also, in finance, the term refers to a ratio used to figure out the value of a company.
Take a company's EBITDA (an alternative earnings figure that basically measures the company's cash flow). Compare this to the company's enterprise value (the amount the total company is worth; fundamentally, the market value of its equity plus its amount of debt...the amount it would take to buy the company if you were just going to write a check at current market values). The number you get is the enterprise multiple.
Once you have this number, you can compare valuations of different companies. You can see if the market places a higher value on a $1 of EBITDA at Company A versus a $1 of EBITDA at Company B. Maybe this higher valuation is reasonable...like, Company A is growing significantly faster, so it makes sense to have a higher enterprise multiple.
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Finance: What is Efficient Markets Theor...141 Views
Finance a la shmoop what is the efficient markets theory well
there should just be a big picture of Warren Buffett right here it should be [Two men carrying a framed picture of Warren Buffett]
the man Warren explaining the efficient market theory himself and that theory
states that it's impossible to beat the market over a sustained period of time
it should be Warren Buffett who explains that all relevant information comes [Warren Buffett giving a presentation on stage]
public in public stocks and that the market more or less immediately
incorporates all that information in its pricing
hence nobody can ever beat the market over a long period of time so why should [Men falling asleep during a presentation]
Warren Buffett be giving this little definition because the efficient market
theory is wrong Buffett has beaten the market for decades in a row in every way [Warren Buffett beating up the market with a stick]
shape and form so you have a really memorable huge figure in finance this
guy and then pipsqueak professors who are kind of a laughing stock whenever the [Professor jumping on the microphone stand trying to talk]
wealthy power crowds gather in Omaha for their National Convention that's what
they say at the Woodstock of Finance if you will fortunately most people keep [Man with arms folded standing naked in a corridor]
their clothes on for this one
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What is the price-to-earnings ratio? It's the price of the stock divided by its earnings. Stock price: $14; earnings: $1. The P-E ratio then is 14.
