Which of the Following Statements Is FALSE

question 16

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.

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World Trade Organization

An international organization that regulates and facilitates international trade between nations.

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Refers to agreements or promises that are enforceable by law.

International Commerce

The exchange of goods, services, and capital across international borders or territories.

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A sector concerned with the maintenance or improvement of health through the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in people.