An Example of a Relative Valuation Technique Is the Price/Cash

question 71

True/False

An example of a relative valuation technique is the Price/Cash Flow ratio.

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after deducting variable costs, indicating how much contributes to covering fixed costs and generating profit.

Operating Income

Income generated from a company's regular business operations, excluding expenses such as taxes and interest charges.

Variable Costs

Expenses that vary directly with the level of production or sales, such as materials and labor.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.