Valuation: Comps & Precedents
When are free-cash-flow multiples (P/FCF or FCF yield) more informative than EV/EBITDA, and what are their pitfalls?
Model answer
FCF multiples shine when EBITDA flatters the business: capital-intensive companies where capex eats most of EBITDA, or companies with big gaps between accrual earnings and cash (working-capital drag,…
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