45、Most of the differences among companies with respect to quality of earnings are addressed when companies are compared using:

A. price to cash flow ratios but not price to earnings ratios.

B. price to earnings ratios but not price to cash flow ratios.

C. either price to cash flow ratios or price to earnings ratios.

D. neither price to cash flow ratios nor price to earnings ratios.

[此贴子已经被作者于2008-11-7 15:30:00编辑过]

Correct answer = A

"Introduction to Price Multiples," John D. Stowe, Thomas R. Robinson, Jerald E. Pinto, and Dennis W. McLeavey
2008 Modular Level I, Vol. 5, pp. 204-210, 218-223
Study Session 14-61-a, b
discuss the rationales for, and the possible drawbacks to, the use of price to earnings (P/E), price to book value (P/BV), price to sales (P/S), and price to cash flow (P/CF) in equity valuation;
calculate and interpret P/E, P/BV, P/S, and P/CF
Most quality of earnings differences between companies (use of aggressive versus conservative accounting methods) are not likely to be a problem when using P/CF ratios, but are a problem when using P/E ratios. 

thanks