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:

Rate of Return

The profit or loss of an investment over a particular period, represented as a proportion of the initial investment amount.

Employee Morale

The overall outlook, attitude, satisfaction, and confidence that employees feel at work.

Capital Investment

Financial allocation towards the purchase or maintenance of long-term assets such as property, plants, and equipment, with the expectation of generating future returns.

Qualitative Characteristic

A feature used to describe or categorize non-quantitative aspects of items, events, or conditions, often used in accounting and finance to evaluate factors that are not numerically based.