Which of the following factors tend to increase a company's P/E (price- to-earnings) ratio? Lower expected growth in future earnings and lower uncertainties in future cash flows O Lower expected growth in future earnings and higher uncertainties in future cash flows O Higher expected growth in future earnings and higher uncertainties in future cash flows O Higher expected growth in future earnings and lower uncertainties in future cash flows
Which of the following factors tend to increase a company's P/E (price- to-earnings) ratio? Lower expected growth in future earnings and lower uncertainties in future cash flows O Lower expected growth in future earnings and higher uncertainties in future cash flows O Higher expected growth in future earnings and higher uncertainties in future cash flows O Higher expected growth in future earnings and lower uncertainties in future cash flows
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter14: Valuation: Market-based Approach
Section: Chapter Questions
Problem 8QE
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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