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shutvik [7]
3 years ago
13

Suppose that a firm has a price-earnings ratio which is higher than a value deemed to be normal. Investors tend to infer from th

is information that a. the firm's bonds will increase in their ratings. b. the firm's bonds will decrease in their ratings. c. the firm's stock is over-valued and one should consider selling the stock. d. the firm's stock is under-valued and one should consider buying the stock. e. the firm will be paying increased dividends.
Business
1 answer:
Dmitrij [34]3 years ago
8 0

Answer:

(C) The Firm's stock is overvalued and one should consider selling the stock

Explanation:

Price Earnings Ratio is a measure of market price of stock in relation to it's earnings. It shows how well a company's stock is valued in the market.

Price Earnings Ratio = \frac{Market\ Price\ Per\ Share}{Earnings\ Per\ Share}

A high price earnings ratio would lead investors to believe that the firm's stock prices are higher than it's earnings which means the stock prices are overvalued.

This further means, the market price of those stocks is greater than their fair value and it would be beneficial to investors to sell such stocks as it would result into a gain.

Thus, a higher price earnings ratio will lead investors to infer that the firm's stock is overvalued and one should consider selling the stock.

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The income statement of Cullumber Co. for the month of July shows net income of $2,200 based on Service Revenue $6,100, Salaries
saw5 [17]

Answer:

Revenue                                                                      $6,800

Expenses:

  • Salaries and Wages Expense ($2,700)
  • Supplies Expense ($1,050)
  • Depreciation expense ($250)
  • Insurance expense ($600)
  • Utilities Expense ($400)                                   <u>($5,000)</u>

Net income                                                                  $1,800

1) you must add insurance expense

2) you must decrease supplies expense = $1,200 - $150 = $1,050

3) you must add depreciation expense

4) you must increase salaries and wages expense = $2,300 + $400 = $2,700

5) you must increase revenue = $6,100 + $700 = $6,800

3 0
3 years ago
Who would pay the most as a percentage of income under a regressive tax
Alex Ar [27]
Someone earning $10,000 a year will pay the most as a percentage of income under a regressive tax. =)
5 0
3 years ago
What degree is needed to be an accountant?<br> I really, really, really need the answer
Lina20 [59]
It’s not required but accountants go to college and earn their bachelors degree!
4 0
3 years ago
Read 2 more answers
Which of these investments is not a function of the production department?
Rus_ich [418]

Which of these investments is not a function of the production department: wage increases.

<h3>Does wage increase with productivity?</h3>
  • They discover that for average remuneration, a one percentage point increase in productivity growth corresponds to a 0.74 percentage point rise in compensation growth. Similar to median compensation, their estimate deviates from one by a statistically significant amount but not from zero.
  • Prices increase when salaries grow faster than labor productivity while prices decrease when wages grow slower than productivity.
  • Inflation is brought on by wage increases since doing business becomes more expensive as wages rise. Companies must raise the prices for their products and services to offset the cost increase and keep their profitability at the same level.
  • Five tons of labor are produced per hour. Physical productivity growth drives up the value of labor, which in turn drives up to pay.

Which of these investments is not a function of the production department: wage increases.

To learn more about wage increases, refer to:

brainly.com/question/23498945

#SPJ4

5 0
2 years ago
After thirteen years as a laborer for Hendrix Construction, Jimmy was promoted to the position of foreman. He is directly respon
Lesechka [4]

Answer: Jimmy is now a member of SUPERVISORY MANAGEMENT.

Explanation: Supervisory management in an organisation is defined as a person with the official task of overseeing the work of a person or group, or of other operations and activities.

They are directly responsible for supervising workers and evaluating daily performance.

They spend most of their time on technical and human relations skills.

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