11. Which of the following conditions for a company are most likely to lead to a

Question

11. Which of the following conditions for a company are most likely to lead to a high P/E ratio? a. high expected growth and high risk b. low expected growth and high risk c. high expected growth and low risk d. low expected growth and low risk 12. Andrews Industrial has implemented a new credit and collection policy that has lowered DSO and freed up $25,000 in cash. The company invests this cash to earn 5% interest. If the tax rate for Andrews is 30%, what is the increase in net income associated with this policy? a. $125 b. $425 c. $875 d. $1,250

Explanation / Answer

11) High P/E Ratio means of a company means High expected Growth and Low risk.

So the answer is (c)

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