Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

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

---

Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or services based on a chosen activity base.

Manufacturing Overhead

The indirect costs associated with manufacturing a product, which include expenses such as equipment depreciation, utilities, and salaries for maintenance staff.

Direct Labor-Hours

A measure of the total hours worked directly on the manufacturing of goods.

Machine-Hours

A unit of measure indicating the operational time of machinery, often used in manufacturing to allocate costs based on machine usage.