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Which of the Following Is Not a Concern When Estimating

Question 46

Multiple Choice

Which of the following is not a concern when estimating P/E ratios and future EPS?


A) The P/E ratio may be highly variable across an industry.
B) The P/E ratio can be difficult to compute and not readily available.
C) The volatile nature of earnings implies a great deal of volatility in P/E multiples.
D) The P/E ratio is uninformative when companies have negative or very small earnings.
E) Net income, and hence earnings per share, are susceptible to the influence of accounting choices and earnings management.

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