Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)Because capital expenditures can vary substantially from period to period,most practitioners rely on enterprise value to free cash flow multiples.
• B)Common multiples to consider are enterprise value to EBIT,EBITDA,and free cash flow.
• C)If two stocks have the same payout and EPS growth rates as well as equivalent risk,then they should have the same P/E ratio.
• D)Looking at enterprise value as a multiple of sales can be useful if it is reasonable to assume that the firms will maintain similar margins in the future.

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Definitions:

Related Revenues

Income that is directly connected to the primary operations or activities of a business.

Revenue

The total income generated by a business from its normal business operations, such as sales of goods or services.

Earned

Income or revenue that has been generated from business activities or services provided.

Cash

Money in the form of coins or banknotes, especially that used to operate a business.