Several Metrics Suggest That Facebook May Have Been Overvalued at IPO

question 48

True/False

Several metrics suggest that Facebook may have been overvalued at IPO.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory then subtracting goods sold.

FIFO Basis

Stands for "First In, First Out," an inventory valuation method where the costs of the earliest goods purchased or produced are the first to be recognized in determining cost of goods sold.

Perpetual Inventory System

A method where inventory quantities and cost of goods sold amounts are updated continuously as sales occur and purchases are made.

Lower-of-cost-or-market

An accounting principle that values inventory at the lower of its historical cost or current market price.