The Price/cash Flow Ratio Has Grown in Prominence and Use

question 204

True/False

The price/cash flow ratio has grown in prominence and use for valuing firms because many analysts contend that a firm's cash flow is less subject to manipulation than the firm's earnings per share.

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Definitions:

Donation Revenue

Income received from giving without the expectation of receiving something in return, typically for non-profit organizations.

Restricted Fund Method

An accounting strategy used for tracking and reporting separately on resources that are restricted by donors for specific purposes.

Capitalize

To record a cost/expense on the balance sheet for the purposes of delaying full recognition of the expense over time through depreciation or amortization.

Expense Capital Assets

The process of recording the cost of a capital asset as an expense over its useful life, often through depreciation or amortization.