In expressing corporate objectives aimed at enhancing shareholder value,a firm combining its debt and market value of its stock and then subtracting the capital invested in the company,is using the _____ approach.

Question

Quizplus · Accepted Answer

The given approach of combining the debt and market value of stock and then subtracting the capital invested in the company is known as Market Value Added (MVA) approach. This approach measures the value created by the firm for its shareholders by subtracting the total capital invested in the company from the combined debt and market value of the stock. Therefore, option C - MVA approach best fits the description. Options A, B, and D - Return on Capital, Economies of Scale, and Cash Conversion Cycle respectively are different financial metrics used to evaluate a company's performance in different areas and are not related to the given scenario.

In Expressing Corporate Objectives Aimed at Enhancing Shareholder Value,a Firm