Which of the following statements is false?
A) Because capital expenditures can vary substantially from period to period, most practitioners rely on enterprise value to free cash flow multiples.
B) Common multiples to consider are enterprise value to EBIT, EBITDA, and free cash flow.
C) If two stocks have the same payout and EPS growth rates as well as equivalent risk, then they should have the same P/E ratio.
D) Looking at enterprise value as a multiple of sales can be useful if it is reasonable to assume that the firms will maintain similar margins in the future.

Question

Quizplus · Accepted Answer

A) Because capital expenditures can vary substantially from period to period (e.g., a firm may need to add capacity and build a new plant one year, but then not need to expand further for many years), most practitioners rely on enterprise value to EBITDA multiples.

Which of the Following Statements Is False