Every multiple is a shorthand for a discounted-cash-flow. A price-to-earnings ratio of 20 embeds assumptions about growth, risk and reinvestment; putting them in a ratio hides the assumptions rather than removing them.
The rule that prevents most errors is matching numerator to denominator. Equity value goes with post-interest measures such as eps and free-cash-flow; enterprise value goes with pre-interest measures such as ebitda and operating-income.
Example: Northwind Tools trades at $26 a share on 96 million shares, a $2.5B market cap. Against $78M of net income that is a 32 times multiple; against $195M of EBITDA the enterprise multiple is 14.5 times.
Related: pe-ratio, ev-ebitda, market-cap-versus-enterprise-value, comparable-company-analysis, discounted-cash-flow