Which of the Following Statements Is FALSE

question 10

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 price-earnings ratio by using either trailing earnings or forward earnings with the resulting ratio called the trailing price-earnings or forward price-earnings.
• 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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Definitions:

Adopted

A term referring to someone who has been legally taken into another's family and raised as their own child.

Emotional Bonds

The deep connections formed between individuals, often characterized by feelings of affection, loyalty, and love.

Secondary Group

A large, impersonal social group whose relationships are formal and goal oriented; their interactions are usually temporary.

Activities

Actions or tasks that are carried out by individuals or groups, typically requiring effort and aimed at achieving a certain goal.