Ratios which relate firm's stock to its book value per share, cash flow and earnings are classified as_________?
Correct answer: D. Market value ratios
- A. Return ratios
- B. Equity ratios
- C. Marginal ratios
- D. Market value ratios
Explanation
Market value ratios compare the market price of a firm's stock with accounting measures such as book value per share, cash flow and earnings. Return and equity ratios measure profitability or ownership relationships rather than market pricing.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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