Why Must Care Be Taken When Comparing a Firm's Share

question 67

Multiple Choice

Why must care be taken when comparing a firm's share price to its operating income?

• A)Both share price and operating income are related to the whole firm.
• B)Share price is a quantity related to the entire firm,while operating income is an amount that is related solely to equity holders.
• C)Both share price and operating income are related solely to equity holders.
• D)Share price is a quantity related to equity holders,while operating income is an amount that is related to the whole firm.
• E)Share price is a quantity related to the enterprise value of the firm,while operating income is related to the equity holders.

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Definitions:

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