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Which of the following statements is FALSE?A. The current ratio provides a measure of the short-term solvency of the firm.B. Price-earnings ratio reflects the book value per share per dollar of accounting earnings for a firm.C. Total asset turnover measures how much in sales is generated by each dollar of firm assets.D. Times interest earned, also known as the interest coverage ratio, provides a relative measure of how well the firm's operating earnings can cover current interest obligations.

Respuesta :

Answer:

The false statement is letter "B":  Price-earnings ratio reflects the book value per share per dollar of accounting earnings for a firm.

Explanation:

Price-earnings ratio or P/E ratio link a firm's share price to its earnings per share. P/E ratios are frequently taken as positive indicators in a company since it reflects that investors are waiting for high growth rates of the stock. Otherwise, they sometimes may indicate that the stock value is over-valuated.

In that sense, option "B" states that the P/E ratio demonstrates the value per share/per dollar of accounting earning of a company, which is false since the accounting earning of a company is more complex than only the earning it has per its stock's shares.

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