chapter 2

Question 1

Financial statement

Answer 1

accounting reports issued by a firm periodically (usually quarterly and annually) that presents past information and a snap shot of the firm’s financial position.

Question 2

Market value vs book value

Answer 2

• book value of equity is a inaccurate assessment of the actual value of the firm’s equity.

Question 3

• Market capitalization

Answer 3

– the total market value of the firm’s equity

Question 4

Enterprise value (EV)

Answer 4

• Assess the value of the underlying business assets, unencumbered by debt and separate from any cash and marketable securities.