Which of the Following Statements Concerning the Price to Cash-Flow

question 5

Multiple Choice

Which of the following statements concerning the Price to Cash-Flow approach to stock valuation are true?
I. The Price to Cash-Flow method works just as well for non-dividend paying stocks as it does for dividend-paying stocks.
II. The Price to Cash-Flow calculate s the intrinsic value of a stock as the present value of future cash flows.
III. The Price to Cash-Flow ratio divides the market price of one share of stock by cash flow per share.
IV. The Price to Cash-Flow method should never be used to calculate the intrinsic value of a share.

• A) I and III only
• B) III and IV only
• C) I, III and IV only
• D) I, II and III only

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