Use the figure for the question(s) below:
-An investor estimates the value of a firm which manufactures cookware by examining the cash flows of similar firms. Which of the following is assumed to be the same for these firms?
A) P/E
B) annual growth rates
C) payout rates
D) all of the above

Question

Use the figure for the question(s) below: 
-An investor estimates the value of a firm which manufactures cookware by examining the cash flows of similar firms. Which of the following is assumed to be the same for these firms?
A) P/E 
B) annual growth rates 
C) payout rates 
D) all of the above

Quizplus · Accepted Answer

When an investor estimates the value of a firm by examining the cash flows of similar firms, it is assumed that key financial metrics such as P/E ratios, annual growth rates, and payout rates are similar across these firms. This assumption is necessary to make a valid comparison and valuation.

Use the Figure for the Question(s) Below