Which of the Following Statements Is FALSE

question 38

Multiple Choice

Which of the following statements is FALSE?

• A)We can estimate the value of a firm's shares by multiplying its current earnings per share by the average P/E ratio of comparable firms.
• B)For valuation purposes,the trailing P/E ratio is generally preferred,since it is based on actual not expected earnings.
• C)Forward earnings are the expected earnings over the coming 12 months.
• D)Trailing earnings are the earnings over the previous 12 months.

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Definitions:

Total Assets

The sum of all assets, both current and noncurrent, owned by a business.

Liabilities

Financial obligations or debts owed by a business or individual to creditors, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Accounting Equation

The fundamental equation of double-entry bookkeeping that states assets equal liabilities plus equity, serving as the foundation for a balance sheet.

Owner's Equity

The total value of assets owned by the proprietor of a company after all debts have been subtracted.