Which of the Following Statements Is FALSE

question 31

Multiple Choice

Which of the following statements is FALSE?

• A)The fact that a firm has an exceptional management team,has developed an efficient manufacturing process,or has just secured a patient on a new technology is ignored when we apply a valuation multiple.
• B)Valuation multiples have the advantage that they allow us to incorporate specific information about the firm's cost of capital or future growth.
• C)For firms with substantial tangible assets,the ratio of price to book value of equity per share is sometimes used.
• D)Using multiples will not help us determine if an entire industry is overvalued.

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Definitions:

Prn

An abbreviation for "pro re nata," a Latin phrase meaning “as the situation demands” used in healthcare to instruct that medication should be taken as needed.

Sig

A term used in prescriptions, derived from "Signa," indicating the dose, frequency, and manner of taking a medication.

Against

In opposition to or in competition with; denotes a contrasting or conflicting situation.

Milliliter

A unit of volume in the metric system, equivalent to one-thousandth of a liter, commonly used to measure liquids.