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Company X has a P/E ratio of 16 in year 2017 and 16.5 in 2018. In 2018 its P/E ratio is 24. The best way to interpret these data is to conclude that

Company X has a P/E ratio of 16 in year 2017 and 16.5 in 2018. In 2018 its P/E ratio is 24. The best way to interpret these data is to conclude that

Accounting (Text Only)
Accounting (Text Only)
26th Edition
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 6.7BPE
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TB 13-80 Company X has a P/E ratio of 16 in year 2017. Company X has a P/E ratio of 16 in year 2017 and 16.5 in 2018. In 2018 its P/E ratio is 24. The best way to interpret these data is to conclude that
Transcribed Image Text:TB 13-80 Company X has a P/E ratio of 16 in year 2017. Company X has a P/E ratio of 16 in year 2017 and 16.5 in 2018. In 2018 its P/E ratio is 24. The best way to interpret these data is to conclude that
the shares have great growth capacity and should be bought. the shares are under-priced and should be bought. other financial results and news should be examined to determine the cause of the P/E ratio change. the shares are overpriced and should be sold.
Transcribed Image Text:the shares have great growth capacity and should be bought. the shares are under-priced and should be bought. other financial results and news should be examined to determine the cause of the P/E ratio change. the shares are overpriced and should be sold.
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