Which of the Following Statements Is CORRECT

question 42

Multiple Choice

Which of the following statements is CORRECT?

• A) If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their market-to-book ratios must also be the same.
• B) If Firms X and Y have the same P/E ratios, then their market-to-book ratios must also be the same.
• C) If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their P/E ratios must also be the same.
• D) If Firms X and Y have the same earnings per share and market-to-book ratio, they must have the same price earnings ratio.
• E) If Firm X's P/E ratio exceeds that of Firm Y, then Y is likely to be less risky and also to be expected to grow at a faster rate.

Develop effective listening skills and understand their benefits in organizational communication.

Understand the beginning process of the indirect method of cash flows.

Recognize the importance of cash flow amounts and their timing in operational planning and analysis.

Grasp the concept and calculation of the cash flow on total assets ratio.

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Definitions:

Net Loss

The result when a company's expenses exceed its revenues during a specific period, indicating negative profitability.

Cash Dividends

Payments made by a corporation to its shareholder members. It represents the share of earnings distributed.

Stock Dividends

A payment to shareholders in the form of additional shares of stock rather than cash.

Paid-in Capital

Funds raised by a company through the sale of its equity securities, excluding any par value of the shares.