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

question 38

Multiple Choice

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

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

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Definitions:

Participatively Set

Designed or established with the involvement or cooperation of all members of the group or organization.

Goals

Specific objectives or outcomes that individuals or organizations aim to achieve within a certain timeframe.

Job Design

The method of structuring work through the organization of tasks, duties, and responsibilities to boost job satisfaction and improve performance.

Open-book Management

A management approach where business financial information is shared with all employees to engage them in operating the business.