Which of the Following Is Not a Component of the Gordon

question 144

Multiple Choice

Which of the following is not a component of the Gordon (or constant dividend growth rate) model for valuing stocks?

• A)next year's expected dividend
• B)a discount rate that reflects the riskiness of the stock
• C)a constant divided growth rate
• D)next year's expected earnings

---

Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's receivables that may not be collected.

Bad Debt Expense

A ledger showing the value of invoices that a business anticipates it will not be able to receive payment for.

Aging of Receivables

A method for managing accounts receivable by categorizing debts by their due ages to estimate the timing of collections.

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to collect, serving as a contra account to accounts receivable.