Which of the Following Statements Is Correct

question 17

Multiple Choice

Which of the following statements is correct?

• A)If Firms X and Y have the same P/E ratios, then their market-to-book ratios must also be the same.
• B)If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their P/E ratios must also be the same.
• C)If Firms X and Y have the same earnings per share and market-to-book ratio, they must have the same price earnings ratio.
• D)If Firm X's P/E ratio exceeds that of Firm Y, then Y is likely to be less risky and also to be expected to grow at a faster rate.

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Definitions:

Fixed Asset Account

An account that tracks the purchase, depreciation, and disposal of long-term assets used in the production of goods or services.

Book Value

The net value of a company's assets minus its liabilities, as reported on the balance sheet, often used to assess a company's worth.

Balance Sheet

A report that outlines the assets, liabilities, and owners' equity of a business at a certain moment, offering an overview of its financial health.

Office Supplies

Items used in offices for daily operations, like stationery, paper, and other consumables.