Question on: SS1 Accounting - Valuation of Stock
What is the purpose of stock valuation?
View related lesson
A
To determine the worth of a company's shares of stock
B
To track employee performance
C
To calculate taxes owed
Ask EduPadi AI for a detailed answer
Correct Option: A
The purpose of stock valuation is to determine the intrinsic or fair value of a company's shares. This helps investors make informed decisions about whether to buy, sell, or hold a stock.
- A. To determine the worth of a company's shares of stock - This is the primary purpose. Stock valuation methods are employed to estimate the share price.
- B. To track employee performance - This is not related to stock valuation.
- C. To calculate taxes owed - While stock valuation can impact tax calculations, it is not the primary purpose. The main focus is on the value of the shares themselves.
Add your answer
Please share this, thanks!
No responses