单选题
Would projecting future financial performance based on past trends provide a reliable basis for valuation of the following firms? Firm 1: A rapidly growing company that has made numerous acquisitions and divestitures. Firm 2: A large, well-diversified, company operating in a number of mature industries.
Firm 1 Firm 2
①A. No No
②B. No Yes
③C. Yes Yes
【正确答案】
B
【答案解析】Using past trends to project future financial performance would be reliable for a well-diversified firm operating in a number of mature industries. The diversified firm would likely have relatively predictable earnings. Using past trends to project future financial performance would not likely be reliable for the rapidly growing firm involved in numerous acquisitions and divestitures. Such a firm would likely have high earnings volatility.