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.

---

Definitions:

Base Compensation

The initial salary or wage provided to an employee not including any extra benefits such as bonuses or commissions.

Recency Bias

A cognitive bias that gives undue weight to recent events or information when making decisions.

Critical-Incident Technique

Critical-Incident Technique is a qualitative research method used to collect and analyze incidents which are perceived as particularly significant by participants, often to improve service or performance.

Qualified Workforce

A group of employees who possess the necessary skills, education, and experience required for their respective positions.