Which of the Following Valuation Methods Tends to Value Stocks

question 120

Multiple Choice

Which of the following valuation methods tends to value stocks more highly than the others in the list because it considers expected earnings?

• A)liquidation value
• B)book value
• C)P/E multiple
• D)present value of the interest

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Definitions:

Income Ratios

Metrics that evaluate a company's ability to generate earnings relative to its revenue, equity, assets, or other financial metrics.

Liquidation

The process of closing a business and distributing its assets to claimants.

Noncash Assets

Assets that cannot be easily converted to cash, such as property, equipment, and investments, often used for operational purposes.

Income Ratios

Financial metrics that compare different aspects of a company's income to other figures, typically used to assess financial performance and efficiency.