Hi.

Choose the best answer. State your explanation.

21) The price-earnings ratio for firms in the Standard & Poor's 500 Index has averaged ________ over the last 110 years.

A) 11

B) 16

C) 17

D) 23

E) 30

22) The discounted cash flow (DCF) method of valuation uses the discounted present value of cash flow so it is not subject to the bias of different:

A) Discount rates.

B) Internal rates of return.

C) Monetary systems.

D) Accounting policies for determining total assets and net income.

23) If an earnings multiplier is not available for a given firm, the multiplier used in an earnings-based method of valuation of a firm is often estimated from comparable:

A) Taxable entities.

B) Industries.

C) Firms.

D) For-profit firms.

E) Publicly-held firms.

24) Which one of the following items is not a measure of a company's liquidity?

A) Accounts receivable turnover.

B) Return on equity.

C) Quick ratio.

D) Cash flow ratio.

E) Day's sales in inventory.

25) Which one of the following forms of compensation is a based upon the achievement of performance goals for a period?

A) Perk.

B) Stock option.

C) Performance shares.

D) Bonus.

E) Salary.

26) Which one of the following forms of compensation includes special services and benefits for the employee?

A) Perk.

B) Stock option.

C) Performance shares.

D) Bonus.

E) Salary.

27) A method for determining a bonus based upon the performance of the unit is a(n):

A) Segment-based pool.

B) Unit-based pool.

C) Firm-based pool.

D) Activity-based pool.

E) Function-based pool.

28) A method for determining a bonus based upon the performance of the firm is a(n):

A) Segment-based pool.

B) Unit-based pool.

C) Firm-based pool.

D) Activity-based pool.

E) Volume-based pool.

29) All of the following are common payment options for bonus compensation plans except:

A) Performance shares.

B) Current bonus.

C) Deferred bonus.

D) Preferred bonus.

E) Stock options.

30) The profit multiplier used by service firms measures:

A) Efficiency of direct labor.

B) Effectiveness of program services.

C) Net revenue per direct labor dollar.

D) Ability to collect accounts.

E) Ability to account for net profits.

-ca