When Multiples Are Derived from an Analysis of Historical Earnings

question 14

True/False

When multiples are derived from an analysis of historical earnings, they are referred to as trailing multiples.

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Definitions:

Return On Assets

A financial metric used to gauge how efficiently a company uses its assets to generate profit.

Common Equity

The amount of ownership interest in a corporation, represented by common stock, that is available to shareholders after debts and liabilities have been settled.

Debt Financing

The raising of capital through the sale of bonds, bills, or notes to individual and/or institutional investors.

Maturity Structure

The classification of a portfolio or entity's liabilities based on the time frame until those obligations mature or are due for payment.