CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

(1 + g) / (r - g) is the formula to calculate ______.
A. P/E
B. P/S
C. P/CF
Explanation: P / Cash Flow per Share = (1 + g) / (r - g). Note that g is the expected growth rates of future cash flows!

User Contributed Comments 1

User Comment
andrewevelyn Because that equation is basically an annuity formula, which can be applied direct to CF. No need to worry about factors like the payout ratio, etc.
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