There are ten true or false questions

All else being equal, a company with a large EV/Capital ratio will tend to have a large return on capital (ROC).

A company forecast to have negative economic value added (EVA) forever, will be trading at

EV/Capital ratio that is smaller than one. (All else equal.)

In the context of relative firm valuation, a company whose cash holdings are equal to $0

will have an enterprise value (EV) greater than zero. (Assume total assets are positive.)

In the context of the adjusted present value (APV) model of firm valuation, one major

assumption is that firms will have a fixed level of debt in the future.

Discounting free cash flows to equity (FCFE) at the weighted-average cost of capital

(WACC) will tend to overstate the true intrinsic value of equity.

A firm's EV/EBIT(1-T) ratio will always be greater than the same firm's EV/EBIT ratio. (Assume a positive tax rate T.)

The business with a net present value (NPV) of a firm equal to $0 is an example of a fairly valued business. (All else equal.)

In the framework of relative valuation, if two companies have the same P/E ratios

then both firms will generally have different EV/EBITDA ratios.

In the context of relative valuation, it makes sense to use the equationPE=13+(2g)

to adjust a company's PE ratio for differences in growth (g

). (Assuming statistical significance.)

In practice, we can find a firm's net profit margin (NPM) by dividing the firm's PS ratio by the

firm's PE ratio.