Why Do We Use Market Values Rather Than Book Values

question 71

Essay

Why do we use market values rather than book values in calculation of WACC?

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Definitions:

Peter Drucker

A pioneering management consultant, educator, and author, whose extensive writings on management practices and business philosophies have had a significant influence on modern organizational management.

Operating Objectives

Specific, short-term aims that guide the operations of an organization, focusing on efficient and effective achievement of core operational goals.

Financial Capital

The funds and resources available to a business for use in the production of goods or services, including investments, cash, and other assets.

Core Competencies

Fundamental strengths and strategic advantages of an organization or individual, which are central to its identity and performance.