The Dividend Discount Model (DDM) Can Be Used to Value

question 24

True/False

The dividend discount model (DDM) can be used to value preferred stock by simply using a growth rate of zero in the DDM model.

---

Definitions:

Receivables Turnover Ratio

A financial metric used to measure how efficiently a company collects cash from its credit sales by dividing net credit sales by average accounts receivable.

Credit Sales

Sales made by a business that allow the buyer to pay at a later date, typically recorded as accounts receivable.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Liquidity Ratio

A financial metric used to determine how quickly a company can pay off its short-term liabilities with its liquid assets.