A company's market value is generally less than its book value. True of Falses ?
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A company's market value is generally less than its book value.
True of Falses ?
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- What can you say about the market value of the company? is it positve or is negative?Inflation accounting is favored by modern financial analysts over the historical cost accounting as historical cost accounting suffers from the following disadvantage/s a. Understated depreciation and understated cost of sales lead to overstatement of profits, compounded by price inflation b. Understatement of assets will depress a company s share price and make it vulnerable to takeover c. All the given statements are the disadvantages of historical cost accounting that lead to favor inflation accounting. d. Overstated profits can lead to too much being distributed to shareholders, leaving insufficient amounts for investments.The break-even point is the sales level at which a company neither earns a profit nor incurs a loss True False
- What would be a reason a company would want to overstate income? A. to help nudge its stock price higher B. to lower its tax bill C. to show a decrease in overall profits D. none of the aboveWhat would be a reason a company would want to overstate income?A. to help nudge its stock price higherB. to lower its tax billC. to show a decrease in overall profitsD. none of the aboveThe corporate valuation model cannot be used unless a company pays dividends. a. True b. False
- Market risk is A) the risk of bad business strategy or management decisions being made B) the risk that a company will be unable to meet its financial obligations C) the risk of not being able to close out your position quickly and at a fair price D) the risk of prices going up or down E) also known as inflation riskThe weak-form of EMH implies which of the following may be used to earn an abnormal return and beat the market(a) Technical analysis using all past price information (b) Fundamental analysis using company accounts’ data (c) Insider trading (d) Both answers B and C- Firm may invest heavily, but that investment while producing earnings may not add value if operating income is below required return on net operating assets. True or False
- Respond Anna's criticism that shareholders’ equity does not represent the market value of the companyThe current ratio and the quick or acid-test ratio may be too high for the overall good of the business. True or false?Proponents of the use of Fair Value Accounting (FVA) argue that the use of fair value reflects current market conditions. On the contrary, opponents of the FVA argue that under specific circumstances, such as a financial crisis, mark to market accounting may lead to considerable volatility in the financial statements and especially the Income Statement (Laux and Leuz, 2009). Critically discuss the merits and flaws of FVA in relation to cost accounting.