Question #89
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: 31
Status: Unattempted
Correct Answer: B
Question
If cash flow from operations (CFO) embeds financing-related flows, it should be adjusted by:
Answer Choices:
A. subtracting capital expenditures
B. subtracting (net interest outflow) × (1 - tax rate)
Explanation
Cash flow from operations CFO should be adjusted to CFO + (net cash interest outflow) ×
(1 – tax rate), if CFO embeds financing-related flows.