Which Factor Is Least Likely to Explain Why a Company

question 45

Multiple Choice

Which factor is least likely to explain why a company has a higher P/E than another?

• A) The company has a higher growth rate of earnings.
• B) The company has a higher required return.
• C) The company has a higher current ratio.
• D) The company has a higher return on equity.

---

Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for a more accurate comparison of actual to budgeted performance.

Servicing Materials

Materials and supplies used in the maintenance and repair of machinery or equipment during the production process or in providing services.

Flexible Budget

A budget designed to adapt to variations in activity or volume levels.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or sales activity within a certain period.