Question

Market value ratios provide management with an indication of how investors view the firm's past performance and especially its future prospects. These ratios include the Price/Earnings, the Market/Book, and Enterprise Value/EBITDA ratios. a. True b. False

Answer 1

The correct answer is letter "A": True.

Step-by-step explanation:

Market value ratios help investors find out what is the current value of the stock of publicly traded companies. Thanks to market value ratios, investors can have an idea if a firm's stock is overpriced or undervalued. Examples of market value ratios are the Book Value Per Share, Earnings Per Share, Price-to-Earnings ratio or the Enterprise Value (EV) to the Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) ratio.