The Price-To-Cash-Flow Method of Stock Valuation Generally

question 46

Multiple Choice

The price-to-cash-flow method of stock valuation generally

• A) uses either EBITDA or operating cash flow from the cash flow statement as a measure of cash flow.
• B) relies on historical cash flows.
• C) produces a cash flow multiple that is greater than the P/E multiple.
• D) applies the P/E multiple to the cash flow per share value.

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Definitions:

Maturity Value

The amount payable to an investor at the end of an investment period.

7.5 Years

A timeframe equal to seven and a half years, often used in contexts like finance or project planning.

Compounded Monthly

The process of adding interest to the principal balance of a loan or deposit on a monthly basis, resulting in interest on interest.

Compounded Quarterly

Compound interest that is calculated and added to the principal balance of an investment or loan on a quarterly basis, effectively increasing the amount of interest earned or paid each quarter.