Which Method of Determining a Firm's Net Worth Divides the Market

question 108

Multiple Choice

Which method of determining a firm's net worth divides the market price of the firm's stock by the annual earnings per share, and multiplies this number by the firm's average net income for the past five years?

• A) Debt/equity method
• B) Current ratio method
• C) Price-earnings ratio method
• D) Long-term asset method
• E) Outstanding shares method

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Definitions:

Appellant

A party who appeals a court's decision, seeking a review and reversal from a higher court.

Environmental Protection Agency

A federal agency tasked with protecting human health and the environment through the creation and enforcement of regulations.

Independent Agency

A government body that operates independently of the executive branch and is tasked with regulating certain aspects of the economy or society.

Mediator

A neutral third party who assists in negotiations and conflict resolution between disputing parties.