Which Method of Determining a Firm's Net Worth Divides the Market

question 58

Multiple Choice

Which method of determining a firm's net worth divides the market price of the firm's stock by the annual earnings per share,and multiplies the result by the firm's average net income for the past five years?

• A)Long- term asset method
• B)Current ratio method
• C)Price- earnings ratio method
• D)Outstanding shares method
• E)Debt/equity method

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Definitions:

Product Departmentation

A method of organizing a company based on the different products manufactured or services provided.

Functional Departmentation

The process of organizing a business into distinct departments, each responsible for a specific function or area, such as marketing or finance.

Centralized

The concentration of control, authority, or decision-making power within a singular or limited locale or organization hierarchy.

Communication

The process of sharing information, ideas, feelings, and messages through speech, writing, signals, or behaviors.