Which of these are best practices for testing valuation by parts based on multiples of peers?
I.Eliminating outliers.
II.Using means of all peers.
III.Using medians of close peers.
IV.Using NOPLAT instead of EBITA.

Question

Quizplus · Accepted Answer

Eliminating outliers helps in reducing the impact of extreme values that might skew the analysis. Using medians of close peers is preferred over means because medians are less affected by outliers and provide a more accurate representation of the central tendency for data that is not normally distributed. Using NOPLAT (Net Operating Profit Less Adjusted Taxes) instead of EBITA (Earnings Before Interest, Taxes, and Amortization) is often considered a better measure for valuation purposes because it accounts for the actual cash taxes paid, providing a clearer picture of the company's operational efficiency.

Which of These Are Best Practices for Testing Valuation by Parts