单选题
Are the statements about the following valuation metrics true or false?
Statement 1: As compared to the price-to-earnings ratio, the price-to-cash flow ratio is easier to manipulate because management can easily control the timing of the cash flows.
Statement 2: One of the benefits of earnings per share as a valuation metric is that it facilitates the comparison of firms of different sizes.
Statement 1 Statement 2
①A. False True
②B. True False
③C. False False
【正确答案】
C
【答案解析】Although manipulation of cash flow can occur, the P/E ratio is easier to manipulate because earnings are based on the numerous estimates and judgments of accrual accounting. EPS does not facilitate comparisons among firms. Two firms may have the same amount of earnings but the number of shares outstanding may differ significantly.