Which Two of the Following Statements Accurately Explain Why the Companies

question 25

Multiple Choice

Which two of the following statements accurately explain why the companies described cannot easily be valued using income- flow- based methods?

• A) The probable reserves of oil companies have a large influence on their valuation.
• B) The variable costs of raw materials make it difficult to assess manufacturing company income.
• C) The range of shares held makes it relatively simple for a shareholder to assess the income of an investment trust.
• D) Property investment companies are primarily valued on the basis of their assets.

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Definitions:

Average Operating Assets

An efficiency metric calculated by averaging the value of a company's operational assets over a period, often used in rate of return calculations.

Direct Material Measures

Quantitative assessments used to determine the amount of direct materials required for production.

Financial Measures

Quantitative metrics used to assess a company's financial health and performance, such as income, cash flow, and profitability ratios.

Internal Business Process Measures

Metrics used to evaluate the efficiency and effectiveness of a company's internal operations.