The price:sales ratio is especially useful when analyzing firms that have which

Question

The price:sales ratio is especially useful when analyzing firms that have which one of the following?
A. volatile market prices
B. positive PEG ratios
C. a negative Tobin's Q

D. negative profits
E. increasing sales

Which one of the following statements is correct?
A. Book values should always be given precedence over market values.
B. Financial statements are frequently used as the basis for performance evaluations.
C. Historical information provides no value to someone who is predicting future performance.
D. Potential lenders place little value on financial statement information.
E. Reviewing financial information over time has very limited value.

Explanation / Answer

When the sales are showing an increasing trend, it would be more useful analyse the price-sales ratio.

By analysing this ratio, we can know how the share prices are getting adjusted with increasing sales.

Hence, correct option is (E)

2.

Correct option is C. Historical information provides no value to someone who is predicting future performance.

Because it is the only one major way available to analyse he firm operational performanec.

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