Which of the Following Statements Is FALSE

question 49

Multiple Choice

Which of the following statements is FALSE?

• A)The money taken in by the firm as a result of the share issue exactly offsets the dilution of the shares.
• B)Most analysts prefer to use performance measures and valuation multiples that are based on the firm's earnings before interest has been deducted.
• C)Because the firm's earnings per share and price-earnings ratio are affected by leverage implies that we can always reliably compare these measures across firms with different capital structures.
• D)In general,as long as the firm sells the new shares of equity at a fair price,there will be no gain or loss to shareholders associated with the equity issue itself.

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Definitions:

Corporate Social Responsibility

Refers to business practices involving initiatives that benefit society and demonstrate care for the environmental and social impacts of a company's operations.

Credit Risk

The risk that a borrower will not repay a loan according to the terms, leading to a financial loss for the lender.

Accounting Method

A set of rules used to determine when and how income and expenses are reported in the financial statements, such as cash basis or accrual basis accounting.

Retained Earnings

Retained earnings refer to the portion of net income left over after dividends are paid out to shareholders, which is reinvested into the company.