Which of the following might be expected to be the best value-relevant attribute in determining the price of a share of a firm's stock?

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a key financial metric that measures the profitability of a firm on a per-share basis. It is a direct indicator of a company's profitability, and therefore its potential to generate future cash flows. As a result, EPS is one of the most widely used metrics by investors to determine the value of a firm's stock. The market value of plant, property, and equipment (A) and the book value of the firm's assets (D) are both important in determining a firm's overall value, but they are not directly relevant to price per share. The number of employees (B) is also not directly relevant to a firm's stock price. Earnings per share of the firm is the best value-relevant attribute in determining the price of a share of a firm's stock as it reflects the profitability of the company and its potential for future growth. The market value of plant, property, and equipment, number of employees, and book value of the firm's assets are all important indicators, but they do not directly impact the earnings per share or profitability of the company.

Which of the Following Might Be Expected to Be the Best