Question #50
Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples
PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf
Page: 17
Status: Incorrect
Correct Answer: A
Your Answer: C
Question
Which of the following are advantages of using EV/EBITDA?
Answer Choices:
A. EV/EBITDA ignores how different revenue recognition policies affect CFO
B. EBITDA is useful for valuing capital-intensive businesses with high levels of depreciation and amortization
C. If working capital is growing, EBITDA will be larger than CFO
Explanation
EBITDA is useful for valuing capital-intensive businesses with high levels of depreciation
and amortization. The other statements are disadvantages to using EV/EBITDA.