Why Is It in General Difficult to Determine the Market

question 63

Multiple Choice

Why is it in general difficult to determine the market price of a private corporation's shares at any point in time?

• A) The price of its shares is fixed by the owners.
• B) It has a limited number of owners.
• C) There is no organised market for its shares.
• D) It is difficult to obtain enough information to accurately value such a company.

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Definitions:

Financial Statements

Summarized records of a company's financial activities, including the balance sheet, income statement, and cash flow statement.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Future Decision Making

The process of considering and evaluating potential actions or policies with their anticipated outcomes in the context of future events.

Operating Cash Flow

The cash generated from a company's normal business operations, indicating the ability to generate adequate cash flow to maintain and expand operations.