Hi guys,
Just a quick inquiry, for the denominator of equity Q for ‘liabilities’, which of the value would be used? Book value, market value or replacement value? Is replacement value of liabilities equal to market value of liabilities? Thanks
Use market value of liabilities
CFAI Vol 3, pg 162, Solution 2
“The denominator of equity q reflects the difference between the replacment cost of assets and the market value of liabilities”