In trading comps analysis, which measure should generally be preferred to summarize valuation multiples?

In trading comps analysis, which measure should generally be preferred to summarize valuation multiples?

• A. Median
• B. Mean
• C. Mode
• D. Range

Answer: (A)

The median is preferred because multiples from trading comps are often right-skewed due to a few outliers with very high (or very low) values. The median, as the middle value, isn’t pulled by these extreme observations the way the mean is, so it provides a more robust central tendency for typical valuations. The mean can be distorted by outliers, giving a misleading sense of what a representative multiple looks like. The mode might be uninformative in these datasets, especially if there isn’t a clearly repeating value, and the range only shows dispersion without summarizing where the center lies. So, using the median gives a more reliable, representative summary of valuation multiples.

The median is preferred because multiples from trading comps are often right-skewed due to a few outliers with very high (or very low) values. The median, as the middle value, isn’t pulled by these extreme observations the way the mean is, so it provides a more robust central tendency for typical valuations. The mean can be distorted by outliers, giving a misleading sense of what a representative multiple looks like. The mode might be uninformative in these datasets, especially if there isn’t a clearly repeating value, and the range only shows dispersion without summarizing where the center lies. So, using the median gives a more reliable, representative summary of valuation multiples.