________ is a guide to a firm's value if it is assumed that investors value the earnings of a given firm in the same way they do the average firm in the industry.
A) Liquidation value
B) Book value
C) The P/E multiple
D) The present value of the dividends

Question

Quizplus · Accepted Answer

The P/E multiple, also known as the price-to-earnings ratio, is a valuation metric used to determine the relative value of a company's shares. It is calculated by dividing the current market price per share by its earnings per share. The P/E multiple reflects investors' expectations for future earnings growth, risk, and other factors. If a firm has a higher P/E multiple than its peers, it may indicate that investors have higher expectations for its future growth potential. Conversely, if a firm has a lower P/E multiple than its peers, it may indicate that investors have lower expectations for its future growth potential.

________ Is a Guide to a Firm's Value If It