- CFA Exams
- CFA Level I Exam
- Study Session 13. Equity Investments (2)
- Reading 41. Equity Valuation: Concepts and Basic Tools
- Subject 4. Multiplier Models
CFA Practice Question
The issue of differences in accounting conservatism between companies is best addressed when companies are compared using which of the following ratios?
A. Price-to-earnings
B. Price-to-cash flow
C. Price-to-book value
Explanation: Using price-to-cash flow rather than price-to-earnings addresses the issue of differences in accounting conservatism between companies (differences in quality of earnings).
User Contributed Comments 1
| User | Comment |
|---|---|
| Sp1993 | Basically read the Q carefully, I learnt this the hard way :l |