Which of the Following Statements Is False

question 14

Multiple Choice

Which of the following statements is false?

• A) Because capital expenditures can vary substantially from period to period, most practitioners rely on enterprise value to free cash flow multiples.
• B) Common multiples to consider are enterprise value to EBIT, EBITDA, and free cash flow.
• C) If two stocks have the same payout and EPS growth rates as well as equivalent risk, then they should have the same P/E ratio.
• D) Looking at enterprise value as a multiple of sales can be useful if it is reasonable to assume that the firms will maintain similar margins in the future.

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Definitions:

Processing Department

A specific department in a manufacturing operation where a set of processes or operations are performed on materials to convert them into finished goods.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the costs necessary to convert raw materials into finished goods.

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost assigned to individual units of production, considering units that are partially completed.

Processing Department

A unit within a manufacturing facility where a specific type of production activity or process is carried out, such as assembly or painting.