The method of comparators can be applied using the ratio of operating income to revenue as abasis for valuation. If operating income is negative this meansoperating income cannot be used to create a value multiplethe value of the business is negativethe value of the business is zerothe business cannot be sold

Operating Income is an accounting number that measures the amount of operating profit for a company…

Answered: The method of comparators can be…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 2QE

See similar textbooks

Similar questions

When analyzing an income statement, which of the following statements is true? Multiple Choice Depreciation is a non cash item on the income statement. Generally accepted accounting principles (GAAP) require that income is reported when it is earned, even though no cash flow may have occured. Jhy Companies try ot make costs variable with sales as much as possible
A positive price-to-book ratio indicates something is wrong with a company's use of its assets. True False
Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)? I. Firms have the option whether to apply this accounting method. II. Firms can reduce the cost of inventory but not increase it. III. If the NRV is lower, the entry recorded reduces total assets.
True or False: All else being equal, a decrease in a company's profit margin will result in an increase in its return on assets. Select one: True False
What is the impact on profit for the year if income overstated? a. no effect b. profit will be overstated c. cannot be determined due to insufficient information d. profit will be understated
cop
Which limitation of an income statement occurs when one company uses an accelerated depreciation method while another company uses straight-line depreciation? O Companies omit from the income statement items they cannot measure reliably. O Income measurement involves judgment. O Income numbers are affected by the accounting methods employed. All of these answer choices are correct.
Do solve asap True and False questions - Indicate True or False 1. A negative net present value is acceptable. 2. Sunk costs are relevant past expenditures. 3. The liquidity ratio tests the solvency of the company.
Which of the followings is/are drawbacks associated with valuation by comparables with P/S or P/E? Earnings can be negative Company may have no earnings at all Sales may not be representative if products are different Sales can be manipulated i, ii and iii only i and iii only i and ii all
Which of the following statements is/are FALSE: I. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows. V. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset's useful life and increase the asset's capacity is capitalised.…
Explain how is it possible for a business to earn a gross profit but still incur a net loss.
If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that write-down affect the company's financial statements? Multiple Choice Total assets will decrease. Net income will increase. Net income and total assets will both decrease. Gross margin will decrease.

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Business/Professional Ethics Directors/Executives…

Accounting

ISBN:

9781337485913

Author:

BROOKS

Publisher:

Cengage

SEE MORE TEXTBOOKS