If You Want to Compare Two Companies, You Should Use

question 3

Multiple Choice

If you want to compare two companies, you should use

• A) Book value per share.
• B) Dividend yield.
• C) Price per share.
• D) Net income.
• E) Price-earnings ratio.

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Definitions:

Split-Off Point

The Split-Off Point is a stage in a production process where multiple products are derived from a common process or input, and each can be individually processed or sold.

Direct Method

An approach to preparing the cash flow statement where actual cash flows from operating activities are listed.

Support Departments

Units within an organization that provide services or support to the operational departments, but do not directly contribute to the production of goods or services.

Cafeteria Department Costs

The expenses associated with operating a cafeteria within an organization, including food supplies, labor, and equipment.