A Firm Has a Price-Cash Flow Ratio of 13

question 111

Multiple Choice

A firm has a price-cash flow ratio of 13.3 and a price-book value ratio of 8.6. If the cash flow per share is $2.39, what is the book value per share?

• A)$2.99
• B)$3.70
• C)$3.98
• D)$4.23
• E)$4.68

---

Definitions:

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to provide profit to the company.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance.

Variable Costs

Expenditures that adjust based on the quantity of production or the scale of sales.

Utility Rates

Charges imposed by utility companies for the use of services such as electricity, gas, water, and sewer.