Which of the following statements is (are)true?

Question

Quizplus · Accepted Answer

For publicly traded corporations, earnings-based forecasts of terminal values are typically more accurate due to the market's focus on earnings and dividends. However, for private companies, cash-flow-based forecasts may be more appropriate. Option A is incorrect as it is not always better to use cash-flow-based forecasts. Option C is incorrect as it is not always better to use earnings-based forecasts. Option D is incorrect as only option B is true. For publicly traded corporations, earnings-based forecasts of terminal values tend to be more accurate predictors of future performance, as they incorporate market expectations and potential changes in the company's earnings structure. However, for privately held companies or those with a less predictable revenue stream, cash-flow-based forecasts may be more appropriate. Therefore, statement A and C are not always true, and statement D overgeneralizes the situation.

Which of the Following Statements Is (Are)true