Condition market to book value ratios be misleading, Financial Management

Assignment Help:

Under what circumstances would market to book value ratios be misleading?  Explain.

The Market to Book ratio is helpful, but it is just only a rough approximation of how liquidation and going concern values compare. This is as the Market to Book ratio employs accounting-based book values.  The actual liquidation value of a firm is similar to be different as compared to the book value.  For example, the assets of a firm may be worth more or less as compared to the value at that they are currently carried on the company's balance sheet.  Additionally, the current market price of the company's bonds and preferred stock may as well differ from the accounting value of these claims.


Related Discussions:- Condition market to book value ratios be misleading

Ratio analysis, How can we calculate ration analysis in financial managemen...

How can we calculate ration analysis in financial management?? Determine the ration analysis? Need assignemt help on this topic

What is business combinations, Q. What is Business Combinations? Combin...

Q. What is Business Combinations? Combining of two entities. Under PURCHASE METHOD OFACCOUNTING, one entity is deemed to attain another and there is a new basis of accountingfo

Explain inventory approach to cash management, Q. Explain Inventory approac...

Q. Explain Inventory approach to cash management? This method analysis cash in the same way as engine inventory such that EOQ models may be employed. In such conditions cash

Equity theory, Equity Theor y This theory proposes that indivi...

Equity Theor y This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute

Calculation of variances, a) Distinguish among standard costing and budgeta...

a) Distinguish among standard costing and budgetary control.  (b)"Calculation of variances in standard costing is not an end in itself, but a means  to an end" Brief discussion

How are the hibor, Q. How are the HIBOR, HSI and HSI futures related? T...

Q. How are the HIBOR, HSI and HSI futures related? The HIBOR and HSI are contrariwise related. So futures on HIBOR and HSI are as well inversely related. Display

Explain should a firm hedge and why or why not, Should a firm hedge?  Why o...

Should a firm hedge?  Why or why not? Answer:  Firms may not need to hedge exchange risk in a perfect capital market. But firms can add to their value by hedging if markets are

Evaluate the use of market multiples, The annual report and accounts for As...

The annual report and accounts for Astra Zeneca plc and Epistem Holdings plc and other relevant financial information are available in the ‘TMA 02 Resources folder' in the Assessme

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd