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.
B. Company E is probably judged by investors to be riskier.
C. Company E must have a higher market-to-book ratio.
D. Company E must pay a lower dividend.
E. Company E trades at a higher P/E ratio.
Answer: E
You might also like to view...
In a production environment that manufactures goods to customer specifications, a job-order costing system
a. can be used only if standard costs are used for materials and labor. b. will provide reasonable product cost information only when all jobs utilize approximately the same quantities of material and labor. c. may be maintained using either actual or predetermined overhead rates. d. emphasizes that large customers create the most costs even though they also provide the most revenues.
Which of the following is not TRUE about members of in-groups under LMX theory?
a. They get better assignments. b. They receive higher performance ratings. c. They have greater levels of job satisfaction. d. They are more likely to become LMX leaders themselves.
The entry to record amortization of a customer list in the amount of $4,500 is as follows:
a. Amortization (or Selling) Expense . . . . . . . . . . . . . . . . . . . . . . . 4,500 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 b. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 c. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 d. Amortization (or Selling) Expense . . . . . . . . . . . . . . . . . . . . . . . 4,500 Allowance for Amortization of Customer List . . . . . . . . . . . . . . .. . . . . 4,500 e. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Allowance for Amortization of Customer List . . . . . . . . . . . . . . .. . . . . 4,500
Your sister is thinking about starting a new business. The company would require $300,000 of assets, and it would be financed entirely with common stock. She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business?
A. $38,475 B. $44,145 C. $33,210 D. $40,500 E. $41,310