Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A) We can compute a firm's price-earnings ratio by using either trailing earnings or forward earnings with the resulting ratio called the trailing price-earnings or forward price-earnings.
• B) Using a valuation multiple based on comparables is best viewed as a "shortcut" to the discounted cash flow method of valuation.
• C) Because the enterprise value represents the entire value of the firm before the firm pays its debt, to form an appropriate multiple, we divide it by a measure of earnings or cash flows after interest payments are made.
• D) It is common practice to use valuation multiples based on the firm's enterprise value.

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Definitions:

Career Choice

The decision-making process by which individuals select their future profession or occupation.

Fantasy Period

A stage in career development theory where individuals, often children, fantasize about careers or roles without regard to skills, requirements, or available opportunities.

Realistic Period

A stage in vocational development when individuals begin to explore career options through practical experience and realistic assessment of their own abilities.

Tentative

Described as provisional or experimental, indicating a lack of certainty or a readiness to adapt.