Which of the following statements relating to Net Tangible Asset Backing per share (NTAB)is correct?
A)the share price will normally be higher than the NTAB per share
B)an excess of share price over NTAB per share
C)if the share price is lower than the NTAB per share, the entity is a prime candidate for a takeover
D)all the options are true

Question

Quizplus · Accepted Answer

Net Tangible Asset Backing per share (NTAB) represents the net tangible assets per share of a company. It is calculated by dividing the total net tangible assets of a company by the number of shares outstanding. In general, the share price will be influenced by many factors beyond just the NTAB per share, including the company's growth prospects, earnings potential, and market sentiment. Therefore, it is not necessarily true that the share price will be higher than the NTAB per share. If the share price is lower than the NTAB per share, it may indicate that the market is undervaluing the company's assets, but this does not necessarily mean that the company is a prime candidate for takeover. An excess of share price over NTAB per share may indicate that the market is valuing the company's growth prospects or other intangible assets.

Which of the Following Statements Relating to Net Tangible Asset