The value of a company is measured by:
A)The book value of its debt plus book value of equity
B)The market value of its debt plus book value of equity
C)The market value of its debt plus market value of equity
D)The book value of its debt plus market value of equity

Question

Quizplus · Accepted Answer

The value of a company is best measured by the market value of its debt plus the market value of equity because it reflects the current price that investors are willing to pay for the company's total value. The market value takes into account the current supply and demand of the company's securities in the market, which may differ from the book value. The book value only shows the historical cost of the company's assets and liabilities, and may not reflect the true value of the assets or liabilities due to changes in market conditions.

The Value of a Company Is Measured By