You Own a Share of Stock in Hershey Foods

question 39

Multiple Choice

You own a share of stock in Hershey Foods.In reviewing the stock information in the Wall Street Journal,you note that Hershey's PE ratio is 19.The PE ratio indicates:

• A)the price Hershey Foods stock is trading at now.
• B)the amount investors are willing to pay for every $1 of Hershey Food's earnings.
• C)the percentage of Hershey Food's earnings paid out in dividends.
• D)the amount you can expect to earn on the stock.

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Definitions:

Acquisition Method

An accounting technique used in consolidating the financial statements of a group in which a new acquisition is included.

Business Combinations

Transactions in which one entity gains control over one or more other businesses, including mergers, purchases of net assets, and consolidations.

AASB 3

Refers to the Australian Accounting Standards Board standard that outlines the requirements for the accounting of business combinations, including the recognition and measurement of assets, liabilities, non-controlling interest, and goodwill.

Joint Arrangements

Agreements between two or more parties that establish joint control over economic activities.