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PV of Future Cash Flows and Multiples Based Accounting

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Can any of you OTAs help me answer this question with a short answer please?-

a- In your finance course work you learned that value is the present value of expected net future cash flows. What is the relation between this approach and the use of multiples based on accounting information?

b- How are valuations based on financial statement data affected by companies' financial reporting choices and earnings management?

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The response addresses the queries posted in 319 words with references.

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The response addresses the queries posted in 319 words with references.
//As per the directions, we will write about the relationship between the present value of 'Future Cash Flows' and multiples based on 'Accounting Information'. Then, we will write about the valuation done on the basis of financial statement data affected by company's financial reporting choices and earnings management. It will assist in understanding the importance of financial statement data in assessing the financial performance of a Company.//

A. For equity valuation, multiples ...

Solution provided by:
Ashish Sharma, MBA (IP)
Education
  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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