Originally Posted by
BlackPeter
Hi baller18,
Are you sure this formula makes sense if you use the revenue (being turnover or sales)? I have seen this formula so far applied using the profit (being revenue minus expenses). If you do that, you get some "company value" by basically picking your desired interest (P/E of 10 would be 10%, P/E of 12.5 would be 8%).
However if you use the revenue, than the company might still run a loss (as WYN does). This still doesn't mean it has a negative value, but it means that the P/E formula is not very useful to calculate the company value in this case (unless somebody can predict the future profits ...)