What Is the Main Failing of Examining Earnings Per Share

question 22

Multiple Choice

What is the main failing of examining earnings per share growth as an indicator of success?

• A) It does not take account of the investment needed and risk taken to generate that growth.
• B) It inevitably leads to long- termism.
• C) It ignores the levels of cash flow and profit.
• D) It exaggerates the importance of the investment needed to generate that growth.

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Definitions:

Basket of Goods

A selection of various items that are used to track inflation and the cost of living over time.

Consumer Price Index

An assessment method that evaluates the overall weighted price of a variety of consumer services and goods, like food, transportation, and healthcare, aimed at measuring the rate of inflation.

Quart of Milk

A unit of liquid measurement commonly used in the United States, equivalent to approximately 0.946 liters of milk.

T-shirt

A T-shirt is a casual piece of clothing, typically made of cotton fabric, characterized by its T shape formed by the body and sleeves.