
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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What does it mean to state that a company’s book value per share of common Q stock is less than its market value per share of common stock?
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- M6arrow_forwardwhy should a company invest in the stock of another company?arrow_forwardStatement I. Book value per share is tantamount to earnings per share Statement II. Dividends payable in noncash asset should be charged to accumulated profits at fair value of the noncash asset a. Statement I and II are trueb. Statement I and II are falsec. Statement I is true, Statement II is falsed. Statement I is false, Statement II is truearrow_forward
- The dividend policy of a company affects: A) Only the company's debt levels B) Shareholders' perception and the stock price C) The national inflation rate D) The country's interest rate policy.arrow_forwardStatement I. Appropriation reserve is used to restrict earnings available for dividends Statement II. The issuance of stock dividends increases share capital and total shareholders' equity a. Statement I and II are trueb. Statement I and II are falsec. Statement I is true, Statement II is falsed. Statement I is false, Statement II is truearrow_forwardwhich one is correct please confirm? QUESTION 37 Which of the following statements is true concerning companies that do not pay dividends? a. The cost of equity capital can be estimated using the Capital Asset Pricing Model. b. The cost of equity capital is equal to the growth short-term rate of earnings per share. c. The dividend capitalization model can be used to determine an accurate cost of equity capital. d. None of these are correctarrow_forward
- If a preferred stock is of the cumulative type, a. dividends cannot be passed if they are earned. b. unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders. c. dividends must be paid, and if not a liability is created. d.dividends must be paid on an equal basis with common stock, so long as earnings permit.arrow_forwardExplain why the following statement is wrong: “The stock price is equal to the value of equity, divided by shares outstanding. Therefore, companies should avoid issuing equity because the number of shares outstanding goes up and thus the stock price would decrease."arrow_forwardWhat effect does the stock split have on Nike’s assets? Its liabilities? Its shareholders’ equity?arrow_forward
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