Economics · Business Valuation
When valuing a non-listed company using the P/E ratio method, which adjustment is most likely required to be applied to the peer group P/E ratio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Multiply the P/E ratio by the debt-to-equity ratio of the company
- 2Use the exact same P/E ratio as listed peer companies without any modification
- 3Reduce the P/E ratio to reflect higher risk and lack of marketability✓
- 4Increase the P/E ratio to reflect higher liquidity
Correct answer
Reduce the P/E ratio to reflect higher risk and lack of marketability
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