Sonkin enterprise multiple
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The Sonkin enterprise multiple (Sonkin ratio) was named after by Paul D. Sonkin, a graduate of Columbia Business School. This ratio can be used when Value investing, and can be calculated using the following formula:
Sonkin ratio = (market capitalization + debt – cash) / (earnings before interest and taxes – tax)
The Sonkin ratio is an alternative to the P/E ratio (price to earnings ratio) and represents the multiple of operating earnings an investor would pay if using the company's cash. A lower multiple means that an investor will pay less to own the after-tax operating earnings of the business.[1][2]
References[edit]
- ↑ Saville, Adrian. "Why You Want That Sonkin Feeling".
- ↑ "Paul Sonkin Resources Page". Value Walk. 2 February 2010.
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