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The price/earnings ratio indicates A. The amount of earnings that a company is willing to pay...

The price/earnings ratio indicates

A. The amount of earnings that a company is willing to pay to shareholders in the form of dividends.

B. What multiple of current earnings investors are willing to pay for a share of stock.

C. The net income available to pay out in dividends to shareholders.

D. The amount of earnings in relation to total assets.


Which of the following would be considered an investing activity and a source of cash?


A. Issuance of corporate stock

B. Sale of Dillard’s stock held as an investment

C. Receipt of interest on savings account

D. Purchase of equipment


Which of the following is not a source of cash?

A. Dividends received on investment.

B. Borrowing $5,000 on short-term note.

C. Gain on sale of warehouse.

D. All of these answer choices are sources of cash.


Which of the following is a use of cash?


A. Interest received on investment

B. Dividends paid to stockholders

C. Loss on sale of investment

D. Issuing long-term bonds


Which of the following is not a use of cash?


A. Purchasing supplies for cash

B. Paying dividends to stockholders

C. Buying inventory on account

D. Repayment of bond payable
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Answer #1

The answer for Question 1 is

B) What multiple of current earnings investors are willing to pay for share of stock

The detailed explanation is attached in below picture,

If you have any doubts, please send me a comment before rating my answer and i will clarify the doubt

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