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Why P/E Ratio Method doesn’t provide a reliable valuation figure for a Private Company?

Accounting Valuation Financial Reporting Financial Management Finance
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Question added by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date Posted: 2015/04/23
Upvote (1) Views (4) Followers (3) Answers (2) Report Question
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Pulkit Goel
by Pulkit Goel , Assistant Manager , Ernst Young

Because the market share price data, or the P in P/E ratio is not available for a private company.

Muhammad Rehan Tahir ACCA
by Muhammad Rehan Tahir ACCA , Treasury Manager , Farouk, Maamoun Tamer & Company

P/E ratio = Market value of share/ EPS, as it is not easy to fix or identify the market value of private company share. And also not easy to find the quoted company of same industry and same capital structure. 

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