Why might an analyst prefer to use a measure of cash flow


1. Why might an analyst prefer to use a measure of cash flow generating ability such as earnings instead of sales in relative valuation?

2. To what extent is the procedure for valuation based on discounting cash flows and valuation by multiples similar?

3. In seeking to establish comparable companies in relative valuation analysis, what is the problem with specifying too stringent criteria for companies to be included in the comparable group?

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Business Management: Why might an analyst prefer to use a measure of cash flow
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