Present Value Methods Are Often Used with Receivables and Liabilities

question 51

Multiple Choice

Present value methods are often used with receivables and liabilities:

• A) With payment schedules in excess of one year.
• B) With payment schedules of less than one year.
• C) When fair values can be easily determined.
• D) When asset are sold in the middle of the accounting cycle.

---

Definitions:

Firm's Financial Position

The status of a company's assets, liabilities, and equity at a given point in time, as reflected in its financial statements.

Market/Book Ratio

Also known as the price-to-book ratio, it compares a company's market value with its book value, indicating how much investors are paying for each dollar of net assets.

Stock Price

Stock price is the current market price of a share of stock, reflecting the value the market places on a company.

Book Value

The net value of a company's assets found on its balance sheet, and calculated as total assets minus intangible assets and liabilities.