{"id":20203,"date":"2021-08-22T07:41:17","date_gmt":"2021-08-22T07:41:17","guid":{"rendered":"https:\/\/analystprep.com\/study-notes\/?p=20203"},"modified":"2024-04-05T11:44:27","modified_gmt":"2024-04-05T11:44:27","slug":"international-considerations-when-using-multiples","status":"publish","type":"post","link":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/","title":{"rendered":"International Considerations When Using Multiples"},"content":{"rendered":"<p><iframe loading=\"lazy\" src=\"\/\/www.youtube.com\/embed\/0kMmbenpFuo\" width=\"611\" height=\"343\" allowfullscreen=\"allowfullscreen\"><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">\ufeff<\/span><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">\ufeff<\/span><\/iframe><\/p>\r\n\r\n<p style=\"text-align: left;\">Comparing companies across borders is complicated as it involves differences in accounting methods, economic differences, cultural differences, and resulting differences in growth and risk opportunities. P\/E ratios for firms in the same industry but in different countries have been found to vary widely. Although international accounting standards are converging, differences still exist across borders, sometimes making comparisons difficult.<\/p>\r\n<p>Analysts must be aware of differences across standards and adjust when disclosures provide sufficient data to do so. International accounting differences affect the comparability of all price multiples.<\/p>\r\n<blockquote>\r\n<h2>Question<\/h2>\r\n<p>Which of the following is <em>least likely <\/em>a source of cross-border valuation differences?<\/p>\r\n<ol style=\"list-style-type: upper-alpha;\">\r\n\t<li>Accounting methods.<\/li>\r\n\t<li>Differences in risk.<\/li>\r\n\t<li>Differences in P\/E.<\/li>\r\n<\/ol>\r\n<h4>Solution<\/h4>\r\n<p><strong>The correct answer is C.<\/strong><\/p>\r\n<p>The differences in P\/E are the least likely a source of cross-border valuation differences.<\/p>\r\n<p><strong>B is incorrect: <\/strong>Differences in risk are a source of cross-border valuation differences.<\/p>\r\n<p><strong>A is incorrect: <\/strong>Accounting methods are a source of cross-border valuation differences.<\/p>\r\n<\/blockquote>\r\n<p>Reading 25: Market-Based Valuation: Price and Enterprise Value Multiples<\/p>\r\n<p><em>LOS 25 (o) Explain sources of differences in cross-border valuation comparisons.<\/em><\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>\ufeff\ufeff Comparing companies across borders is complicated as it involves differences in accounting methods, economic differences, cultural differences, and resulting differences in growth and risk opportunities. P\/E ratios for firms in the same industry but in different countries have been&#8230;<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[102,401],"tags":[216,402,488,474],"class_list":["post-20203","post","type-post","status-publish","format-standard","hentry","category-cfa-level-2","category-equity-valuation","tag-cfa-level-2","tag-equity-valuation","tag-international-considerations-when-using-multiples","tag-reading-29-market-based-valuation","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes<\/title>\n<meta name=\"description\" content=\"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes\" \/>\n<meta property=\"og:description\" content=\"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\" \/>\n<meta property=\"og:site_name\" content=\"CFA, FRM, and Actuarial Exams Study Notes\" \/>\n<meta property=\"article:published_time\" content=\"2021-08-22T07:41:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-05T11:44:27+00:00\" \/>\n<meta name=\"author\" content=\"Irene R\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Irene R\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\"},\"author\":{\"name\":\"Irene R\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5\"},\"headline\":\"International Considerations When Using Multiples\",\"datePublished\":\"2021-08-22T07:41:17+00:00\",\"dateModified\":\"2024-04-05T11:44:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\"},\"wordCount\":179,\"keywords\":[\"CFA-level-2\",\"Equity Valuation\",\"International Considerations When Using Multiples\",\"Reading 29: Market-Based Valuation\"],\"articleSection\":[\"CFA Level II Study Notes\",\"Equity Valuation\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\",\"url\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\",\"name\":\"International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes\",\"isPartOf\":{\"@id\":\"https:\/\/analystprep.com\/study-notes\/#website\"},\"datePublished\":\"2021-08-22T07:41:17+00:00\",\"dateModified\":\"2024-04-05T11:44:27+00:00\",\"author\":{\"@id\":\"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5\"},\"description\":\"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.\",\"breadcrumb\":{\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/analystprep.com\/study-notes\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"International Considerations When Using Multiples\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/#website\",\"url\":\"https:\/\/analystprep.com\/study-notes\/\",\"name\":\"CFA, FRM, and Actuarial Exams Study Notes\",\"description\":\"Question Bank and Study Notes for the CFA, FRM, and Actuarial exams\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/analystprep.com\/study-notes\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5\",\"name\":\"Irene R\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/33caf1e1bcb63ee970b36351f165c7bc714b19614993ab9c2c8bf36273b7df48?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/33caf1e1bcb63ee970b36351f165c7bc714b19614993ab9c2c8bf36273b7df48?s=96&d=mm&r=g\",\"caption\":\"Irene R\"},\"url\":\"https:\/\/analystprep.com\/study-notes\/author\/irene\/\"}]}<\/script>\n<meta property=\"og:video\" content=\"https:\/\/www.youtube.com\/embed\/0kMmbenpFuo\" \/>\n<meta property=\"og:video:type\" content=\"text\/html\" \/>\n<meta property=\"og:video:duration\" content=\"3761\" \/>\n<meta property=\"og:video:width\" content=\"480\" \/>\n<meta property=\"og:video:height\" content=\"270\" \/>\n<meta property=\"ya:ovs:adult\" content=\"false\" \/>\n<meta property=\"ya:ovs:upload_date\" content=\"2021-08-22T07:41:17+00:00\" \/>\n<meta property=\"ya:ovs:allow_embed\" content=\"true\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes","description":"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/","og_locale":"en_US","og_type":"article","og_title":"International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes","og_description":"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.","og_url":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/","og_site_name":"CFA, FRM, and Actuarial Exams Study Notes","article_published_time":"2021-08-22T07:41:17+00:00","article_modified_time":"2024-04-05T11:44:27+00:00","author":"Irene R","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Irene R","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#article","isPartOf":{"@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/"},"author":{"name":"Irene R","@id":"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5"},"headline":"International Considerations When Using Multiples","datePublished":"2021-08-22T07:41:17+00:00","dateModified":"2024-04-05T11:44:27+00:00","mainEntityOfPage":{"@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/"},"wordCount":179,"keywords":["CFA-level-2","Equity Valuation","International Considerations When Using Multiples","Reading 29: Market-Based Valuation"],"articleSection":["CFA Level II Study Notes","Equity Valuation"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/","url":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/","name":"International Considerations When Using Multiples - CFA, FRM, and Actuarial Exams Study Notes","isPartOf":{"@id":"https:\/\/analystprep.com\/study-notes\/#website"},"datePublished":"2021-08-22T07:41:17+00:00","dateModified":"2024-04-05T11:44:27+00:00","author":{"@id":"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5"},"description":"Learn the complexities of comparing companies across borders in valuation, including differences in accounting methods, and economic factors.","breadcrumb":{"@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/analystprep.com\/study-notes\/cfa-level-2\/international-considerations-when-using-multiples\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/analystprep.com\/study-notes\/"},{"@type":"ListItem","position":2,"name":"International Considerations When Using Multiples"}]},{"@type":"WebSite","@id":"https:\/\/analystprep.com\/study-notes\/#website","url":"https:\/\/analystprep.com\/study-notes\/","name":"CFA, FRM, and Actuarial Exams Study Notes","description":"Question Bank and Study Notes for the CFA, FRM, and Actuarial exams","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/analystprep.com\/study-notes\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/7002f30d8f174958802c1c30b167eaf5","name":"Irene R","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/analystprep.com\/study-notes\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/33caf1e1bcb63ee970b36351f165c7bc714b19614993ab9c2c8bf36273b7df48?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/33caf1e1bcb63ee970b36351f165c7bc714b19614993ab9c2c8bf36273b7df48?s=96&d=mm&r=g","caption":"Irene R"},"url":"https:\/\/analystprep.com\/study-notes\/author\/irene\/"}]},"og_video":"https:\/\/www.youtube.com\/embed\/0kMmbenpFuo","og_video_type":"text\/html","og_video_duration":"3761","og_video_width":"480","og_video_height":"270","ya_ovs_adult":"false","ya_ovs_upload_date":"2021-08-22T07:41:17+00:00","ya_ovs_allow_embed":"true"},"_links":{"self":[{"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/posts\/20203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/comments?post=20203"}],"version-history":[{"count":7,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/posts\/20203\/revisions"}],"predecessor-version":[{"id":24580,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/posts\/20203\/revisions\/24580"}],"wp:attachment":[{"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/media?parent=20203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/categories?post=20203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/analystprep.com\/study-notes\/wp-json\/wp\/v2\/tags?post=20203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}