Which of the Following Statements Is FALSE

question 38

Multiple Choice

Which of the following statements is FALSE?

• A)We can estimate the value of a firm's shares by multiplying its current earnings per share by the average P/E ratio of comparable firms.
• B)For valuation purposes,the trailing P/E ratio is generally preferred,since it is based on actual not expected earnings.
• C)Forward earnings are the expected earnings over the coming 12 months.
• D)Trailing earnings are the earnings over the previous 12 months.

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to estimate the company's value if it were to be liquidated.

Accounts Receivable

Money owed to a company by its debtors for goods or services that have been delivered or used, but not yet paid for.

Source of Cash

Various origins from where a company or individual receives cash, including operations, financing activities, investments, and external funding.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.