Which of the Following Is Not True About the P/E

question 20

Multiple Choice

Which of the following is not true about the P/E ratio?

• A) A comparison of one company with its peers also involves a great deal of subjectivity regarding company-specific characteristics.
• B) P/E ratios only work well on companies in the high growth stage of their lifecycle.
• C) P/E ratios are uninformative when companies have negative or very small earnings.
• D) The volatile nature of earnings implies a great deal of volatility in P/E multiples.

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Definitions:

Suppliers

Entities or individuals that provide goods or services to the market, often in exchange for payment.

Laptops

Portable computers equipped with a keyboard and a screen, designed for mobile use.

Technology Improvements

Enhancements and advancements in technology that increase productivity, efficiency, or utility in various sectors.

Curve Shifts

Movements or adjustments in the position of a graphed line, such as those in supply and demand curves in economics, indicating a change in underlying factors affecting these curves.