Market value ratios indicate
A)whether the firm is using its assets productively
B)whether the firm is liquid
C)whether the firm is liquid and whether the firm is profitable
D)how highly the firm is valued by investors

Question

Quizplus · Accepted Answer

Market value ratios are used to determine how highly a firm is valued by investors. They include ratios like price-to-earnings ratio (P/E ratio), price-to-sales ratio (P/S ratio), and market-to-book ratio (M/B ratio), which reflect investors' perception of a company's future earnings potential and growth prospects. These ratios do not provide information about a firm's productivity or liquidity, as these are typically measured using other types of ratios.

Market Value Ratios Indicate