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Answer: Accounting practices and reporting standards create inconsistencies, making comparisons challenging.
**Explanation:** - **Option A** is incorrect because price multiples are widely used due to their ease of calculation. - **Option B** is incorrect because a key advantage of price multiples is their ability to facilitate relative comparisons, both cross-sectionally (against peers or the market) and over time. - **Option C** is correct because variations in accounting methods and reporting standards across markets can lead to discrepancies in financial metrics (e.g., revenues, earnings, book values, and cash flows), making comparisons unreliable.
Author: LeetQuiz Editorial Team
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A disadvantage of using price multiples to value stocks is that:
A
Multiples are difficult to compute.
B
Relative comparisons across companies or markets are not feasible.
C
Accounting practices and reporting standards create inconsistencies, making comparisons challenging.
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