Which of the Following Is NOT True About the P/E

question 82

Multiple Choice

Which of the following is NOT true about the P/E ratio?

• A)A comparison of one company with its peers also involves a great deal of subjectivity regarding company-specific characteristics.
• B)P/E ratios only work well on companies in the high growth stage of their lifecycle.
• C)P/E ratios are uninformative when companies have negative or very small earnings.
• D)The volatile nature of earnings implies a great deal of volatility in P/E multiples.

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