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.

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Definitions:

Labour Cost

The total expense incurred for hiring employees, including wages, benefits, and taxes.

Labour Efficiency Variance

A cost management tool used to measure the difference between the actual labor hours used and the standard labor hours expected to produce a certain level of output.

Direct Labour Standard

A benchmark for the amount of work (measured in labor hours or costs) expected to produce a certain quantity of goods.

Uncontrollable Costs

Costs that cannot be influenced or controlled by a manager under normal circumstances.