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Which of the following statements are correct?
a. If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their market-to-book ratios must also be the same.
b. If Firms X and Y have the same P/E ratios, then their market-to-book ratios must also be equal.
c. If Firms X and Y have the same earnings per share and market-to-book ratio, then they must have the same price/earnings ratio.
d. If Firm X's P/E ratio exceeds that of Firm Y, then Y is likely to be less risky and/or be expected to grow at a faster rate.
e. If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their P/E ratios must also be the same.

Respuesta :

Answer:

e. If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their P/E ratios must also be the same.

Explanation:

If two companies have same net income, same number of outstanding shares then its Earnings per share = [tex]\frac{Net\ Income}{Number\ of\ shares}[/tex] will be same.

Further the market is also same.

In that case,

P/E ratio = [tex]\frac{Market\ Price}{Earnings\ Per\ Share}[/tex] will also be same.

As both the numerator and denominator in the fraction is same.

Therefore, Statement E is correct.

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