Acta Univ. Agric. Silvic. Mendelianae Brun. 2022, 70(3), 131-145 | DOI: 10.11118/actaun.2022.011

Differentiated Estimates of Valuation Multipliers based on Price-to-Book Ratio for the Czech Brewing Industry

Michal Drábek1, Pavel Syrovátka1
1 Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

This article focuses on the differentiated estimations of industry multipliers in relation to Price-Book Value ratio (P/BV) with applying for the Czech brewing industry. Differentiation of estimates brings better approximation of these sector-wide multipliers to the defined groups companies within the given markets and thus increases the accuracy of the method of relative business valuation. Due to the absence of market data on privately held companies, the market value was assessed using the DCF method, while the book value was taken from the enterprise's accounts. The assumption of the linearity of the market-book value relationship for the subsequent calculations and differentiation of P/BV estimations was verified using regression analysis. The differentiation of P/BV ratio was made according to the size of entities, but mainly based on equality of market and book value, respectively according to the equality P/BV = 1. Then our results were supplemented by the calculation of industry P/BV ratio using P/EAT ratio and ROE decomposition. Using this additional method, the brewing industry was compared with other relevant industries in the Czech Republic.

Keywords: industry multiplier, market value, price-to-book, price-to-earnings, business valuation, DCF method, Czech brewing industry

Received: March 2, 2022; Revised: April 19, 2022; Accepted: May 2, 2022; Published: July 1, 2022  Show citation

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Drábek, M., & Syrovátka, P. (2022). Differentiated Estimates of Valuation Multipliers based on Price-to-Book Ratio for the Czech Brewing Industry. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 70(3), 131-145. doi: 10.11118/actaun.2022.011
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