The P/E Ratio Is Not Useful When the Firm's ________

question 59

Multiple Choice

The P/E ratio is not useful when the firm's ________ are negative.In this case,it is common to look at the firm's ________ relative to sales.

• A) operating earnings; enterprise value
• B) net earnings; enterprise value
• C) operating earnings; market value
• D) net earnings; market value

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Definitions:

Subsidies

Financial assistance granted by the government to individuals, organizations, or industries to support business activities and encourage economic growth.

Special Taxes

Levies imposed on specific goods, services, or activities, often with the intention of discouraging usage or generating revenue for targeted purposes, distinct from broad-based taxes like income tax.

Tariff

A tax imposed by a government on imports or exports of goods and services.

Import Quota

A government-imposed limit on the amount or value of goods that can be imported into a country over a specified period of time, usually to protect domestic industries.