2. Which of the following statements is CORRECT? a. The more depreciation a firm

Question

2.        Which of the following statements is CORRECT?

a.        The more depreciation a firm has in a given year, the higher its EPS, other things held constant.

b.       Typically, a firm's DPS should exceed its EPS.

c.        Typically, a firm's EBIT should exceed its EBITDA.

d.       If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share.

e.        If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.

Explanation / Answer

d.If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceedits book value per share.

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