The price-to-cash-flow method of stock valuation generally uses either A) EBITDA or operating cash flow from...
The price-to-cash-flow method of stock valuation generally uses either
A) 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.
Homework Answers
Option A
The Price to Cash Flow Ratio is defined as Market Capitalization/ Operating Cash Flow.
Hence Operating Cash flow or EBITDA is used in the formula.
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The price-to-cash-flow method of stock valuation generally uses
either
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Calculate the cash flow from operating activites
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3. Fundamentals of the free cash flow corporate valuation model Aa Aa E Several methods can be used to compute the intrinsic value of a share of a company's common stock. One method uses the free cash flow (FCF) valuation model, while the another method uses the dividend discount model. The FCF valuation model computes a firm's value-also called its the value of its operating activities (Vop) and the value of firm's nonoperating value-as the sum of , where: the...
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