Which TWO of the Following Are Methods Used for Assessing

question 3

Multiple Choice

Which TWO of the following are methods used for assessing the profitability of strategic options?

• A) Forecasting the return on capital employed.
• B) Estimating the impact of the investment on the current ratio.
• C) Estimating the impact of the investment on the gearing ratio.
• D) Forecasting the value of the future returns using the discounted cash flow technique.

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Definitions:

Par Value

The stated value of a financial security, such as a bond or stock, as declared by the issuer.

Preferred Stock

A type of equity security that has a priority claim on a company's assets and earnings before common stock, usually with fixed dividends and no voting rights.

Paid-In Capital Excess

The amount of equity a company generates that is above the par value of its shares, often arising from the initial sale of its stock.

Par Value

A nominal value assigned to a security or stock, often used in accounting to represent the standard or face value.