Meaning of Activity Ratios Activity ratios are also known as asset management ratios, they measure how efficiently a company is using its assets to generate sales. These ratios help determine if the amount of each type of asset is reasonable, too high, or too low in view of current and projected sales. Below we show […]
Liquidity ratios are all about figuring out if a company can pay its bills in the short term. It’s like checking if you have enough cash on hand to cover your immediate expenses. Current Ratio Current Ratio Formula Current Assets / Current Liabilities Interpretation of Current Ratio (What it tells you) This is a basic […]
Question Is it better for a firm’s actual stock price in the market to be under, over, or equal to its intrinsic value? Would your answer be the same from the standpoints of stockholders in general and a CEO who is about to exercise a million dollars in options and then retire? Explain. Solution Stock […]
Question What is a firm’s intrinsic value? Its current stock price? Is the stock’s “true” long-run value more closely related to its intrinsic value or to its current price? Intrinsic Value Definition of Intrinsic value A firm’s intrinsic value is an estimate of its “true” value. It’s based on the company’s expected future cash flows […]
