The Multiple Method of business valuation is a measure under which a ratio is computed and compared with those of other similar businesses within an industry. The multiple is a broad term and the appropriate ratio is calculated by dividing the market or estimated value of an asset by a specific item on the financial statements. The resultant indicator and financial metrics are compared with others across the industry to establish market multiples for the valuation of the business in question. The underlying principle of the multiple method is the assumption that for comparable businesses, the multiples can be used to estimate the fair market value of one business entity based on the value of another. One of the most reliable multiples applied by venture capital and private equity firms is the EBITDA multiple which is used to estimate the fair market value of a business entity.