An analyst has computed a ratio of firm value (which he has defined as the market value

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An analyst has computed a ratio of firm value (which he has defined as the market value of equity plus long-term debt minus cash) to earnings after all interest expenses and taxes.

a. Explain why this ratio is not consistently estimated.

b. Explain why this might be a problem when comparing firms using this multiple.

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

ISBN: 9781118011522

3rd Edition

Authors: Aswath Damodaran

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Question Posted: May 23, 2024 05:01 AM

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An analyst has computed a ratio of firm value (which he has defined as the market value

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

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