Use the Figure for the Question(s) Below

question 32

Multiple Choice

Use the figure for the question(s) below:
-On a particular date, the above information concerning Office Depot, Incorporated, was given on Google Finance. Its competitor, Staples Incorporated, had a stock price of $24.33. Which of the following is closest to the EPS of Staples Incorporated if it is estimated using valuation multiples based on price-earnings ratios?

• A) $1.58
• B) $1.84
• C) $2.63
• D) $14.15

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Definitions:

Fixed Cost Sources

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Financial Risk

The chance of incurring financial losses from an investment or business activity.

Operating Leverage

A measure that shows how revenue growth translates into growth in operating income, highlighting the impact of fixed costs.

Financial Performance

An assessment of how well a company can use assets from its primary mode of business and generate revenues.