When a Company Has Unusually High or Low Net Income

question 85

Multiple Choice

When a company has unusually high or low net income, the ________ is not the most useful valuation ratio.

• A) Current Ratio
• B) Price to Earnings Ratio
• C) Quick Ratio
• D) Price to Book Ratio

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Definitions:

Financial Information

Data regarding the economic activities and condition of an individual or organization, including income, expenses, assets, and liabilities.

Responsible Corporate Officer Doctrine

The Responsible Corporate Officer Doctrine is a principle that holds corporate executives and officers liable for the illegal actions of the corporation, even without direct involvement, if they had power to prevent the misconduct.

Strict Liability

A legal principle that holds an individual or entity responsible for damages or losses, regardless of fault or intention, often applied in product liability cases.

Absolute Liability

Absolute liability is a legal principle that holds an individual or entity responsible for their actions or products, without the necessity of proving negligence or fault.