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Which of the following statements regarding comparable companies is correct? Choose all correct answers. We can regress valuation multiples on firm fundamentals to adjust for
Which of the following statements regarding comparable companies is correct? Choose all correct answers. We can regress valuation multiples on firm fundamentals to adjust for the difference in firm fundamentals. If we choose to use the EV/Sales multiple, a perfect comparable company must have identical expected after- tax operating margin, expected reinvestment rate, weighted average cost of capital and expected growth rate. If we limit comparable companies to the same industry, we might end up with too few comparable companies. If we choose to use the EV/Sales multiple, a perfect comparable company must have identical historical after- tax operating margin, historical reinvestment rate, weighted average cost of capital and historical growth rate
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