The Amount Shareholders Are Willing to Pay for Each $1

question 75

Multiple Choice

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

• A)equity multiplier.
• B)return on equity.
• C)price-earnings ratio.
• D)DuPont identity.
• E)return on assets.

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Definitions:

Non-controlling Interest

A stake in a company that is less than 50%, implying that the holder does not have control over the company's operations.

Equity

The value of an ownership interest in a company, calculated as company assets minus its liabilities and representing the net assets owned by shareholders.

Acquisition Date

The exact date on which control of a business is obtained by the acquirer, upon which the acquirer applies acquisition accounting.

Non-controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company.