The price-to-cash-flow method of stock valuation generally
A) uses either EBITDA or operating cash flow from the cash flow statement as a measure of cash flow.
B) relies on historical cash flows.
C) produces a cash flow multiple that is greater than the P/E multiple.
D) applies the P/E multiple to the cash flow per share value.

Question

Quizplus · Accepted Answer

The price-to-cash-flow method typically uses EBITDA or operating cash flow from the cash flow statement as a measure of cash flow, as these are considered more reflective of a company's cash-generating ability than net income.

The Price-To-Cash-Flow Method of Stock Valuation Generally