A P/E Ratio Is Calculated in the Middle of the Accounting

question 13

Multiple Choice

A P/E ratio is calculated in the middle of the accounting year.For a given share price,the company could use the most recent annual EPS,or it could use the total of the most recent four quarterly EPS numbers.Which of the following statements is not true?

• A)The ratio will be larger if the most recent annual EPS is used when earnings are falling.
• B)The ratio will be smaller if the EPS for the last four quarters are used when earnings are rising.
• C)The ratio will be smaller if the most recent annual EPS is used when earnings are falling.
• D)The ratio will be larger if the EPS for the last four quarters are used when earnings are falling

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Definitions:

Contradictory Evidence

Information or data that directly opposes or disputes the current understanding, beliefs, or hypotheses.

Different Interpretations

The occurrence of various meanings or understandings of a message or piece of information among different people.

Evidence-Based Management

A practice of making managerial decisions and organizational practices based on the best available evidence from multiple sources.

Potential Virtues

Inherent qualities or traits in individuals that may lead to moral excellence if properly developed.