If a Stock Currently Sells for $40

question 4

Multiple Choice

If a stock currently sells for $40.00 and has annual earnings per share of $3.00, the P/E multiple is:

• A)0.075
• B)7.0
• C)13.33
• D)Not shown above.

---

Definitions:

Accrual Basis

An accounting method where transactions are recorded when they are earned or incurred, regardless of when cash is exchanged.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out.

Accounting

The systematic process of recording, measuring, and communicating financial information to help in decision-making.

Supplies Used

The amount of supplies consumed during a specific period, which may be accounted for as an expense.