The P/E Ratio is not useful when the Firm's ................ are negative . In this case...
The P/E Ratio is not useful when the Firm's ................ are negative . In this case \, It is common to look at the firm's .................. relative to sales.
A. Operating earning ;Enterprise value
B.Net earnings;Enterprise value
C. Operating earning ;Market value
D. Net earnings;Market value
Which one is correct
Homework Answers
Answers :
B) Net Earnings; Enterprise value
The firm with a Negative Net income will generate Negative EPS.It indicates that stockholders are losing their money in the Business. At this Situation, calculation of PE Ratio ( Market Price / EPS) is Not Useful to derive any meaningful inferences. Instead of using the PE ratio, generate the EnterpriseValue rative to sales to help the Investors and stockholders for their decisions.
Add Answer to:
The P/E Ratio is not useful when the Firm's ................ are
negative . In this case...
11. The following about the price earnings ratio (P/E) is/are correct except: (2 marks) a. It...
11. The following about the price earnings ratio (P/E) is/are correct except: (2 marks) a. It is computed by multiplying the market price of the share by its earnings per share. b. PE ratio is used to discuss the investment possibility of a given enterprise C. The greater the P/E ratio, the better the perception of investors regarding the future growth of the firm. d. If a company's P/E ratio drops steadily this indicates that investors are confident of the...
14.a company whose stock is selling at a P/E ratio greater than the P/E ratio of...
14.a company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has____ a. an anticipated earning growth rate which is less than that of the average firm b.less predictable earnings growth than that of the average firm. c.greater cyclicality of earnings growth than that of the average firm. d.a dividend yield which is less than that of the average firm. e. none of the above. 15.which of the fllowing combinations...
When earnings are volatile, the ________ ratio can be useful in evaluating a company because ________...
When earnings are volatile, the ________ ratio can be useful in evaluating a company because ________ value is generally more stable than net income. A. Price-to-Book; book B. Price-to-Earnings; book C. Price-to-Earnings; market D. Price-to-Book; market
questions 9-12 please 9. If a firm increases its plowback ratio, this will probably result in...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions....
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions. The profitability ratios include the: (1) Operating profit margin, (2) Net profit margin, (3) Return on total assets (ROA), (4) Basic earning power (BEP) ratio, and (5) Return on common equity (ROE). The operating profit margin indicates what percentage of sales remain after et B are accounted for. It is a measure of the firm's operating effidency. Its equation is: B. It measures the...
what is the firm's BEP? what is the firm's current ratio? what is the firm's days...
what is the firm's BEP?
what is the firm's current ratio?
what is the firm's days sales outstanding? assume a 365 day
year for this calculation
what is the firm's EPS?
what is the firm's equity multiplier?
what is the firm's market-to-book ratio?
The balance sheet and income statement shown below are for Sneaker Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5...
30 The P/E ratio measures the O intrinsic value of the stock relative to earnings per...
30 The P/E ratio measures the O intrinsic value of the stock relative to earnings per share market price of the stock relative to retained earnings market value of the stock relative to earnings per share O book value of the stock relative to earnings per share
nt: Homework 4 True-False 04-001 Ratio analysis involves analyzing financial statements to help appraise a firm's...
nt: Homework 4 True-False 04-001 Ratio analysis involves analyzing financial statements to help appraise a firm's financial position and strength. O a. True O b. False Ajax Corp's sales last year were $510,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's tim interest-earned (TIE) ratio? O a. 12.15 O b. 13.10 TO c. 14.75 O d. 8.85 10 e 11.80 Click here to read the eBook: Market Value Ratios PRICE/EARNINGS RATIO A company...
7. Market value ratios Aa Aa E Ratios are mostly calculated using data drawn from the...
7. Market value ratios Aa Aa E Ratios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ratios, called market-based ratios, relate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial statements. Consider the case of Green Caterpillar Garden Supplies Inc.: Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $8,500,000, and a current...
7) List the key variables that affect the P/E ratio and explain the relationship between each...
7) List the key variables that affect the P/E ratio and explain the relationship between each variable and the P/E ratio. (a) growth rate in earnings; the higher the growth rate, the higher the P/E ratio (b) general state of the economy, the better the economic outlook, the higher the P/E (e) amount of debt in a company's capital structure; the lower the debt ratio, the higher the P/E (d) current and projected rate of inflation; the lower the inflation,...
11. The following about the price earnings ratio (P/E) is/are correct except: (2 marks) a. It is computed by multiplying the market price of the share by its earnings per share. b. PE ratio is used to discuss the investment possibility of a given enterprise C. The greater the P/E ratio, the better the perception of investors regarding the future growth of the firm. d. If a company's P/E ratio drops steadily this indicates that investors are confident of the...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions. The profitability ratios include the: (1) Operating profit margin, (2) Net profit margin, (3) Return on total assets (ROA), (4) Basic earning power (BEP) ratio, and (5) Return on common equity (ROE). The operating profit margin indicates what percentage of sales remain after et B are accounted for. It is a measure of the firm's operating effidency. Its equation is: B. It measures the...
what is the firm's BEP?
what is the firm's current ratio?
what is the firm's days sales outstanding? assume a 365 day
year for this calculation
what is the firm's EPS?
what is the firm's equity multiplier?
what is the firm's market-to-book ratio?
The balance sheet and income statement shown below are for Sneaker Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5...
30 The P/E ratio measures the O intrinsic value of the stock relative to earnings per share market price of the stock relative to retained earnings market value of the stock relative to earnings per share O book value of the stock relative to earnings per share
nt: Homework 4 True-False 04-001 Ratio analysis involves analyzing financial statements to help appraise a firm's financial position and strength. O a. True O b. False Ajax Corp's sales last year were $510,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's tim interest-earned (TIE) ratio? O a. 12.15 O b. 13.10 TO c. 14.75 O d. 8.85 10 e 11.80 Click here to read the eBook: Market Value Ratios PRICE/EARNINGS RATIO A company...
7. Market value ratios Aa Aa E Ratios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ratios, called market-based ratios, relate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial statements. Consider the case of Green Caterpillar Garden Supplies Inc.: Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $8,500,000, and a current...
7) List the key variables that affect the P/E ratio and explain the relationship between each variable and the P/E ratio. (a) growth rate in earnings; the higher the growth rate, the higher the P/E ratio (b) general state of the economy, the better the economic outlook, the higher the P/E (e) amount of debt in a company's capital structure; the lower the debt ratio, the higher the P/E (d) current and projected rate of inflation; the lower the inflation,...
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