Which of the following statements are correct when conducting a market multiples

Question

Which of the following statements are correct when conducting a market multiples valuation analysis:
I. Peer firms should have similar future growth, profitability, and risk characteristics.
II.Forward multiples such as the Forward P/E ratio are preferred to backward multiples.
III. Higher leverage at peer firms will bias their equity multiples downward.
IV. A large sample of peer firms is required to get an accurate valuation.

I only

I and IV only

I, II, and IV only

II and III only

I, II, III, and IV

I only

I and IV only

I, II, and IV only

II and III only

I, II, III, and IV

Explanation / Answer

I. Peer firms should have similar future growth, profitability, and risk characteristics.

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