A Drawback to the Price-To-Cash-Flow Method of Valuation Is That

question 62

True/False

A drawback to the Price-to-Cash-Flow method of valuation is that there is no generally accepted cash flow measure.

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Definitions:

Economic Profit

The difference between the total revenues received by a business and the total opportunity costs of all resources used in the production.

Accounting Profit

The net income of a business as calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Savings

Money that is not spent and is set aside for future use, often in a bank account or other financial instrument.

Financial Statements

Official records that detail the financial activities and condition of a business or individual, including the balance sheet, income statement, and cash flow statement.