Companies E and P Each Reported the Same Earnings Per

question 49

Multiple Choice

Companies E and P each reported the same earnings per share (EPS) ,but Company E's stock trades at a higher price.Which of the following statements is correct?

• A)Company E probably has fewer growth opportunities than company P.
• B)Company E is probably judged by investors to be riskier than company P.
• C)Company E must pay a lower dividend than company P.
• D)Company E trades at a higher P/E ratio than company P.

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Definitions:

Overall Equipment Effectiveness

A measure of manufacturing productivity that calculates how well a manufacturing operation utilizes its equipment in terms of availability, performance, and quality.

Manufacturing Capacity

The maximum volume of products a manufacturing facility can produce over a given period of time under normal working conditions.

Efficiency Rate

A measure of the productivity of a process, often calculated as the ratio of output produced to input used.

Machinery

Mechanical devices or machines collectively, especially those used in industries or agriculture to aid in production processes.