Series 79 practice questionmediumComparable Company Analysis
Why is calendarization used when analyzing multiples in a comparable company analysis?
- ATo adjust for inflation
- BTo ensure financial periods align across companies✓ Correct answer
- CTo remove non-cash charges
- DTo account for currency fluctuations
Explanation
Why B — To ensure financial periods align across companies
Aligning reporting periods (calendarizing) ensures that financial metrics are comparable across peers. Skipping this step can result in mismatched or misleading multiples due to timing differences.
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