EV/EBITDA is less likely to be impacted by differences in international accounting standards than P/E or Price to Free Cash Flow to Equity (P/FCFE).
When the inflation rates in two countries are the same, the justified P/E multiple should be lower for companies with a higher inflation pass through rate, all else being equal.
Assuming all else is equal, a company in a country with high inflation will have lower justified P/E multiples than a company in a country with lower rates of inflation.
Which of the observations regarding comparison of crossborder valuation multiples is the most accurate? Observation 3 Observation 2 Observation 1
Correct answer is observation 3. Why Observation 2 is not correct ?