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If the company's shares are traded in the financial market, the market price of the shares...

If the company's shares are traded in the financial market, the market price of the shares is used in certain financial ratios." Is the market price always accurate? What is it based on, and how might that affect the usage of the ratios that incorporate it?

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The major ratio which uses market price for calculation of financial ratios is valuation ratio. Valuation ratios like Price to Earnings(PE), Price to Book value(PBV), EV to EBITDA(Enterprise value to EBITDA) all uses market price to determine the ratios. The market prices are never accurate and keeps changing as it is being traded. Market prices are based on information and this changes on second to second basis. A valuation ratio taken on particular day might differ from the same valuation ratio taken on a different day.

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