{"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":"2026-06-24T20:18:06","modified_gmt":"2026-06-24T20:18:06","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":"<script type=\"application\/ld+json\">\r\n{\r\n  \"@context\": \"https:\/\/schema.org\",\r\n  \"@type\": \"QAPage\",\r\n  \"mainEntity\": {\r\n    \"@type\": \"Question\",\r\n    \"name\": \"Which of the following is least likely a source of cross-border valuation differences?\",\r\n    \"answerCount\": 3,\r\n    \"acceptedAnswer\": {\r\n      \"@type\": \"Answer\",\r\n      \"text\": \"The correct answer is C. Differences in P\/E. Cross-border valuation differences are commonly driven by factors such as differences in accounting methods and differences in risk across countries and markets. Differences in P\/E ratios are generally a result of these underlying factors rather than being a fundamental source of valuation differences themselves.\"\r\n    },\r\n    \"suggestedAnswer\": [\r\n      {\r\n        \"@type\": \"Answer\",\r\n        \"text\": \"Accounting methods.\"\r\n      },\r\n      {\r\n        \"@type\": \"Answer\",\r\n        \"text\": \"Differences in risk.\"\r\n      },\r\n      {\r\n        \"@type\": \"Answer\",\r\n        \"text\": \"Differences in P\/E.\"\r\n      }\r\n    ]\r\n  }\r\n}\r\n<\/script>\r\n<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\r\n<div style=\"text-align: center; margin: 30px 0;\"><a style=\"display: inline-flex; align-items: center; justify-content: center; padding: 12px 26px; border-radius: 9999px; background: #1e5bd8; color: #ffffff; font-weight: bold; text-decoration: none;\" href=\"https:\/\/analystprep.com\/free-trial\/\" target=\"_blank\" rel=\"noopener noreferrer\"> Start Free Trial \u2192 <\/a> <p style=\"margin-top: 12px; font-size: 16px; line-height: 1.5;\">Review international considerations when using multiples with CFA Level 2 study notes, practice questions, mock exams, and video lessons designed to strengthen your exam preparation.<\/p>\r\n <\/div>","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 v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>International Considerations in Using Multiples | CFA L2<\/title>\n<meta name=\"description\" content=\"Learn challenges in cross-border valuation, including accounting differences, economic 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