Which of the following statements is FALSE?
A) The most common valuation multiple is the price-earnings (P/E) ratio.
B) You should be willing to pay proportionally more for a stock with lower current earnings.
C) A firm's P/E ratio is equal to the share price divided by its earnings per share.
D) The intuition behind the use of the P/E ratio is that when you buy a stock, you are in sense buying the rights to the firm's future earnings and differences in the scale of the firms' earnings are likely to persist.
B
Explanation: B) You should be willing to pay proportionally more for a stock with higher current earnings.
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Two basic accounting principles determine when revenues and expenses are to be recorded under accrual basis accounting. They are
A. revenue principle and matching principle. B. revenue recognition and measurement principles. C. cost and matching principles.
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Indicate whether the statement is true or false