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True or False -It is a flaw to believe that the use of leverage creates value, because leverage does not increase cash flows from an investment

Finance Dec 05, 2020

True or False

-It is a flaw to believe that the use of leverage creates value, because leverage does not increase cash flows from an investment.

-Markets properly adjust for differences in accounting for employee and management stock options.

-Long-term debt is generally forecasted as a percentage of Sales.

-Non-operating assets do not affect the value of the firm.

-One of the drawbacks to both precedent and comparable companies’ analysis is that multiples may be skewed depending on capital markets and/or economic environment at the time of the transaction.

Expert Solution

1.False because leverage increase cash flow from an investment.

False.

2.True.Market properly adjust for differences in accounting for employee and management stock option is correct statement.

True.

3.False because long term debt is not forecasted as a percentage of sales.

False.

5.False non operating asset also effect value of the firm.

False.

6.True.The precedent and comparable analysis not consider many time right information.

True.

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