Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A) As the enterprise value represents the entire value of a firm before the firm pays its debt, to form an appropriate multiple, we divide it by a measure of earnings or cash flows after interest payments are made.
• B) We can compute a firm's price-earnings ratio by using either trailing earnings or forward earnings with the resulting ratio called the trailing price-earnings or forward price-earnings.
• C) It is common practice to use valuation multiples based on a firm's enterprise value.
• D) Using a valuation multiple based on comparables is best viewed as a "shortcut" to the discounted cash flow method of valuation.

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Definitions:

Labor Costs

Labor costs represent the total expenses incurred by employing labor, including wages, salaries, benefits, and taxes, and are a critical factor in the overall cost structure of businesses.

External Inequity

Occurs when employees perceive that their compensation or work conditions are less favorable compared to those in other organizations in the same industry or sector.

Employee Assistance Plans

Employer-sponsored programs designed to help employees deal with personal problems that might adversely impact their work performance, health, and well-being.

Chronic Problems

Issues or conditions that are persistent and long-lasting, often requiring ongoing management or intervention.