Which of the Following Statements Is True

question 62

Multiple Choice

Which of the following statements is true?

• A)The greater the use of debt, the higher the P/E ratio of a firm will be.
• B)Debt has no effect on the P/E ratio of a firm.
• C)Debt has an effect on the P/E ratio of a firm, but it may cause either an increase or a decrease in the ratio, depending on whether or not the firm is a growth firm.
• D)The greater the use of debt, the lower the P/E ratio of a firm will be.

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Definitions:

Quick Response

A strategy or system designed to rapidly fulfill customer orders, often used in manufacturing and retail to improve service levels.

Strategic Decision

A choice made by a company's top management about the direction and scope of the organization, often having long-term effects.

Layout Design

Layout Design refers to the arrangement of physical facilities such as machinery, equipment, and furniture within a workspace to optimize workflow and productivity.

Maintenance

The activities involved in keeping a system’s equipment in working order.