Q1) An analyst Informs you that he uses price/earnings multiples, rather than discounted cash flow valuation, to value stocks, because he does not like making assumptions about fundamentals - growth, risk, and payout ratios. Is his reasoning correct?

Q2) Why might DCF valuation be difficult to do for the following types of firms?

1. A private firm, where the owner is planning to sell the firm.
2. A biotechnology firm, with no current products or sales, but with several promising product patents in the pipeline.
3. A cyclical firm, during a recession.
4. A troubled firm, which has made significant losses and is not expected to get out of trouble for a few years.
5. A firm, which is in the process of restructuring, where it is selling some of its assets and changing its financial mix.
6. A firm, which owns a lot of valuable land that is currently unutilized.