Which of the Following Statements Is CORRECT

question 46

Multiple Choice

Which of the following statements is CORRECT?

• A) The more depreciation a firm has in a given year, the higher its EPS, other things held constant.
• B) Typically, a firm's DPS should exceed its EPS.
• C) Typically, a firm's EBIT should exceed its EBITDA.
• D) If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share.
• E) If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.

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Definitions:

Millions

A numerical value or unit representing one million units of a currency or indicating a quantity of one million in number.

Cash Flow

The total accounting of funds moving in and out of a business, directly affecting its capability to remain solvent.

Stockholders

Individuals or entities that own shares in a corporation, giving them partial ownership.

New Debt

Funds a company borrows through the issuance of debt instruments, such as bonds or loans, as a way to finance operations or projects.