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1. Book value:

a. Is equivalent to market value for firms with fixed assets.

b. Is based on historical cost.

c. Generally tends to exceed market value when fixed assets are included.

d. Is more of a financial than an accounting valuation.

e. Is adjusted to market value whenever the market value exceeds the stated book value.

2. Which two of the following represent the most effective methods of directly evaluating the financial performance of a firm?

I. comparing the current financial ratios to those of the same firm from prior time periods

II. comparing a firm's financial ratios to those of other firms in the firm's peer group who have similar operations

III. comparing the financial statements of the firm to the financial statements of similar firms operating in other countries

IV. comparing the financial ratios of the firm to the average ratios of all firms located in the same geographic area

a. I and II only

b. II and III only

c. III and IV only

d. I and IV only

e. I and III only

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92831761

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