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

Explain the preferred stocks by equity claims, Explain the preferred stocks...

Explain the preferred stocks by equity claims. Preferred stocks are equity claims with limited ownership rights in comparison to common stocks. They differ from common stocks i

Interpretations of short term solvency or liquidity ratio''s, Short Term So...

Short Term Solvency or Liquidity Ratio's   CR:          The Current Ratio is calculated by current assets to current liabilities and is the index of company's financial stab

Explain the definition of arbitrage, Give a full definition of arbitrage. ...

Give a full definition of arbitrage. Answer:  Arbitrage can be illustrated as the act of concurrently buying and selling the same or equivalent assets or commodities for the aim

Who owns a credit union? explain, Who owns a credit union? Explain. Cr...

Who owns a credit union? Explain. Credit unions are owned by their members.  When credit union members place money in their credit union, they aren't technically "depositing"

Define assumption behind experience approach to forecasting, What is the pr...

What is the primary assumption behind the experience approach to forecasting? The experience approach to forecasting is relies on the assumption that things will happen a fixed

How to calculate the future value of an annuity, Calculate the Future Value...

Calculate the Future Value of an Annuity: Annuity is stated as periodic payment every period for a number of periods. This periodic payment is the same each year only then it c

The japanese pension fund system, The Japanese Pension Fund System The J...

The Japanese Pension Fund System The Japanese pension system is a multi-pillar system. Public and private pension schemes are the two important pillars. The first tier is the Ba

Examine the pay-back period , Critically examine the pay-back period as a t...

Critically examine the pay-back period as a technique of approval of projects.

Compare and contrast mutual and stockholder, Compare and contrast mutual an...

Compare and contrast mutual and stockholder-owned savings and loan associations. A few savings and loan associations are owned by stockholders, just like commercial banks and ot

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