Which of the Following Statements Is False

question 11

Multiple Choice

Which of the following statements is false?

• A) Because the enterprise value represents the entire value of the firm before the firm pays its debt, to form an appropriate multiple, we divide it by a measure of earnings or cash flows after interest payments are made.
• B) We can compute a firm's P/E ratio by using either trailing earnings or forward earnings with the resulting ratio called the trailing P/E or forward P/E.
• C) It is common practice to use valuation multiples based on the firm's enterprise value.
• D) Using a valuation multiple based on comparables is best viewed as a "shortcut" to the discounted cash flow method of valuation.

---

Definitions:

Collision Theory

A theory that proposes chemical reactions occur when reactant molecules collide with sufficient energy and an appropriate orientation.

High Energy

A term used to describe processes, particles, or quantum states having relatively large amounts of kinetic or potential energy.

Particle Motion

The description of the kinetic activity of particles in matter, affected by temperature and physical state, underlying the principles of diffusion and gas behavior.

Reaction Speed

The rate at which reactants are converted to products in a chemical reaction.