Which of the Following Will Affect Observed Price Earnings Ratio

question 10

Multiple Choice

Which of the following will affect observed price earnings ratio (lagged ratio) :
I. Quality of earnings
II. Business risk
III. Risk free rate of interest
IV. Expected growth

• A) All of the above
• B) II, III and IV
• C) II and IV
• D) I, II and IV

Calculate and interpret working capital from balance sheet data.

Analyze the financial disclosure requirements for financial instruments.

Recognize the format and content that define the classification and recognition of assets, liabilities, and equity in the balance sheet.

Evaluate different measurement alternatives for balance sheet elements based on descriptive statements.

---

Definitions:

Gross Profit Rate

The ratio of gross profit to net sales, indicating the efficiency of a company in managing its production and labor costs.

Intra-entity Transfer

A transaction occurring between divisions or units within the same legal entity.

Noncontrolling Interest

An ownership interest in a corporation that is less than 50%, not allowing for control over the company's operations.

Depreciable Asset

A tangible or intangible asset used in operations that can be depreciated over its useful life due to wear and tear, deterioration, or obsolescence.