A Drawback to the Price/earnings Ratio Method Is That

question 30

Multiple Choice

A drawback to the price/earnings ratio method is that

• A)the stock of a private company is publicly traded.
• B)the stated net income of a private company may not truly reflect its actual earning power.
• C)it is relatively easy to find a truly comparable publicly held company, even in the same industry.
• D)it distorts profits earned.

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Definitions:

Ethical Issues

Situations or problems requiring a choice between competing sets of principles, where following one set may result in transgressing another.

Altruistic Leader

A leader who prioritizes selflessly the well-being and interests of others above their own, often inspiring loyalty and high morale among followers.

Greatest Good

A principle aimed at achieving the highest level of benefit or welfare for the greatest number of people, often considered in ethical decision-making.

Ethical Approach

A method or strategy for decision-making that prioritizes ethical principles and values, often emphasizing morality, fairness, and justice.