20-24 A market to book ratio greater than one indicates that the book value of equity is overstated.

Question

Quizplus · Accepted Answer

A market to book ratio greater than one indicates that the market value of equity is higher than the book value of equity, which suggests that investors value the company's assets and future earnings potential higher than what is stated on the balance sheet, and does not necessarily mean that the book value is overstated.

20-24 a Market to Book Ratio Greater Than One Indicates