Which of the Following Approaches to Stock Valuation Is NOT

question 27

Multiple Choice

Which of the following approaches to stock valuation is NOT based on a multiple of some figure from the financial statements?

• A) the price to cash flow approach
• B) the price to sales approach
• C) the dividends-and-earnings approach
• D) the price to earnings approach

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Definitions:

Estimating Errors

Mistakes or inaccuracies in forecasting future values or costs, often leading to deviations from expected outcomes.

Unbiased Managers

Refers to managers who make decisions without prejudice or favoritism, aiming for fairness and objectivity in business operations.

Terminal Value

The estimated value of a business at the end of a specific period, considering all future cash flows discounted back to present value.

Detailed Forecast Period

An extended timeframe over which detailed predictions about a company's financial performance, including revenue and expenses, are made.