Thursday, March 13, 2008

Price to Cash Flow Valuation Multiple

The use of this ratio is also becoming popular.

According to Reilly and Brown, the growth in popularity of this relative valuation technique can be traced to concern over the propensity of some firms to manipulate earnings per share. Cash flow values are generally less prone to manipulation.

Discounted cash flow techniques use only cash flow as the basis for valuation.

No comments: