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Andru [333]
3 years ago
14

Which of the following is an inconsistency of using market multiples to determine value? A) Using a market multiple assumes that

the target company is correctly priced, while comparable companies are mispriced. B) Using a market multiple assumes that the target company is mispriced, while comparable companies are correctly priced. C) Using a market multiple assumes that all companies are mispriced. D) Using a market multiple assumes that the target company can be fully described by its summary performance measure.
Business
1 answer:
VikaD [51]3 years ago
6 0

Answer:

B) Using a market multiple assumes that the target company is mispriced, while comparable companies are correctly priced.

Explanation:

Market Multiple, also known as trading multiples, is used to compare two financial measures, to determine the value of a company. It is another name for Price to Earnings Ratio (also called P/E Ratio).

Using the market multiple approach, investors can determine whether stocks in their portfolios will increase or decrease in price through the next term. Investors may then buy or sell stocks in order to maximize their expected gains calculated.

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ABOUT Stephen hawking ​
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Answer:

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Explanation:

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8 0
3 years ago
Read 2 more answers
Erosion can best be explained as the:
Tems11 [23]

Answer:

A. loss of current sales due to a new project being implemented.

Explanation:

In business, erosion takes place when a new product or project competes with another product or project from the came company. This "internal" competition reduces the revenues and benefits from existing products or projects. It is basically a form of business cannibalization, where the left arm takes away from the right arm. E.g. newer smartphone models decrease the sales revenue from existing (older) models.

8 0
3 years ago
A system of accounting for manufacturing operations that produces timely information about inventories and manufacturing costs p
sasho [114]

Answer:

The answer is cost accounting system.

Explanation:

Cost accounting is a tool that allows you to estimate the actual price of the products, which allows you to establish a profit margin for each unit sold. Depending on the activity of the company, several techniques are used such as production costing, process costing, standard costing, absorption costing, etc.

5 0
3 years ago
What would be the consequences if managers of a firm evaluated a project based on its actual dollar cash flows, but used a real
matrenka [14]

Answer:

Real rate of returns are lower than nominal rates of return, therefore, using a real discount rate would overestimate a project's net present value. This could result in unprofitable projects being accepted because the NPV was erroneously calculated. If you want to use a real discount rate, you must first convert cash flows to real dollars.

For example, nominal discount rate is 10%, inflation rate is 5%, real discount rate is 5%.

Initial outlay $100

NCF year 1 = $40

NCF year 2 = $40

NCF year 3 = $40

Using the real discount rate, the NPV = $8.93

Using the nominal discount rate, the NPV = -$0.53

6 0
3 years ago
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