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LOS m: Discuss alternative definitions of cash flow used in price multiples, and explain the limitations of each definition.
Q1. Which of the following measures of cash flow is most closely linked with valuation theory?
A) Cash flow from operations (CFO).
B) Earnings before interest, taxes, depreciation, and amortization (EBITDA).
C) Free cash flow to equity (FCFE).
Q2. If cash flow from operations (CFO) embeds financing-related flows, it should be adjusted by:
A) subtracting (net interest outflow) × (1 - tax rate).
B) adding (net interest outflow) × (1 - tax rate).
C) subtracting capital expenditures.
Q3. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is best suited as a measure of:
A) equity value.
B) total company value.
C) debt capacity. | 
发表于 2009-3-9 17:18
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