Which of the following is NOT an advantage of the valuation multiple method as compared to the discounted cash flow method?
A) calculations based upon widely available information
B) based upon actual stock prices of real firms
C) does not rely on estimates of future cash flows
D) takes into account important differences between different firms

Question

Quizplus · Accepted Answer

The valuation multiple method does not inherently take into account the important differences between different firms, such as growth prospects, risk levels, and profit margins. It primarily relies on comparing multiples (like P/E ratios) of similar firms, which might not fully reflect these differences.

Which of the Following Is NOT an Advantage of the Valuation