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Say you are an analyst with an investment management company and are asked to evaluate the following valuation methods as to the most appropriate for a possible venture index composed of dot.com companies that have no earnings, never had any earnings, and do not expect any earnings in the immediate future.
a. DDM

b. FCFE

c. Price/Earnings

d. Price/Book

Out of the 4 methods which one would you select, and briefly explain of support for your selection, which could include why the other methods are inappropriate.

FCFE-

without dividends and /or earnings, DDM and P/E are useless.

P/B may be acceptable, but always remember

Cash is fact, equity is opinion.

Cashflow is the mother's milk of commerce.

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