Financial economist prefer to use market values when measuring debt ratios because:
A) market values are more stable than book values.
B) market values are a better reflection of current value than historical value.
C) market values are readily available and do not have to be calculated like book values.
D) market values are more difficult to calculate which makes financial economists more valuable.

Question

Quizplus · Accepted Answer

Market values are preferred because they reflect the current value of an asset or liability, rather than its historical cost, providing a more accurate picture of a company's financial situation.

Financial Economist Prefer to Use Market Values When Measuring Debt