In Which of the Following Situations Might the Price/EBITDA Ratio

question 5

Multiple Choice

In which of the following situations might the Price/EBITDA ratio be more useful than the P/E ratio?

• A)when comparing companies from different countries due to the different accounting rules that may apply
• B)when valuing small companies with little or no debt
• C)when valuing firms in an industry that is known to require a lot of upfront capital expenditures
• D)Both B and C describe scenarios in which the Price/EBITDA ratio may be more useful.

Understand and apply the rules for correctly using prepositions in sentences.

Analyze sentences for clarity and coherence, identifying areas of improvement.

Recognize and correct capitalization errors in sentences.

Understand the structure and function of sentences to improve sentence variety.

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Definitions:

MR = MC

A condition in economics where marginal revenue equals marginal cost; it's the optimal production point for firms maximizing their profit.

Monopolistically Competitive

Refers to a market structure where many companies sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Positive Economic Profits

Situations where a firm's total revenues exceed all its costs, including opportunity costs, indicating that it is earning more than the minimum required to stay in business.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for slight differentiation and some control over pricing.