Answered: Which of the following ratios would…

Which of the following ratios would analysts use to value stocks? Select one: a. All of the above b. Price per Earnings c. Price per sales d. Price per cash flow

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 4LO

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Question

Which of the following ratios would analysts use to value stocks?

Select one:

All of the above

Price per Earnings

Price per sales

Price per cash flow

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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