Which of the following are properties that should lead to firms having higher value in the stock market?
I.Higher P/E.
II.First-in,first-out (FIFO )accounting.
III.Higher growth.
IV.ROIC greater than the cost of capital.

Question

Quizplus · Accepted Answer

III and IV only. Higher growth can lead to expectations of higher future earnings, increasing a firm's stock value. A Return on Invested Capital (ROIC) greater than the cost of capital indicates a firm is generating returns above its costs, enhancing value. Higher P/E ratios and FIFO accounting do not inherently increase firm value; they reflect other underlying factors.

Which of the Following Are Properties That Should Lead to Firms