According to the textbook, a problem inherent in using a Price/Cash Flow ratio is that

Question

Quizplus · Accepted Answer

The Price/Cash Flow ratio can be problematic because cash flows can vary widely from one year to the next, leading to unreliable valuations. The Price/Cash Flow ratio can be problematic because cash flows can vary widely from year to year, resulting in an inconsistent valuation metric. Additionally, because it only considers cash flow, it does not take into account factors such as debt repayment, depreciation, and amortization expenses that can impact the overall value of a company's stock.

According to the Textbook, a Problem Inherent in Using a Price/Cash