Describe the primary reasons that a company’s book value in the balance sheet does not equal its market value.

Q: Why do DCMs use dividends and not earnings in their formulas? a. Because earnings are not equal to…

A: DCMs seek to evaluate the fair value of a company regardless of current market conditions, taking…

Q: What are the sign that a company debt is high?

A: The objective of the question is to identify the signs that indicate a company's high level of debt.…

Q: The ability to meet short-term obligations is termed: A) Profitability B) Solvency C) Efficiency D)…

A: Introduction: Short term period: Short term period means less than one year period.

Q: The cost of capital includes the cost of equity, the cost of long-term debt and the cost of accounts…

A: The capital of a corporation is the amount of money or funds that a corporation uses for operating…

Q: Please explain one advantage and one disadvantage of financing a company with debt.   Advantage…

A: Advantage: Tax BenefitsOne significant advantage of financing a company with debt is the potential…

Q: What are the different ways to estimate bad debt? How does this affect net income? What does…

A: The company makes sales on cash and sales on account as well. The company generally makes sales on…

Q: Indicate whether the following statement is true or false. Provide the relevant explanations.  The…

A: The cost of capital is the rate of return that investors require to invest in a company's…

Q: Although

A: BALANCE SHEET AMOUNTS ARE CARRIED AT NORMALLY AT BOOK VALUE

Q: What is the most obvious difference between debt and equity financing? a. Principal and interest…

A: Debt financing includes bonds and debts which are financial instruments and use to raise finance for…

Q: Which of the following is not likely to be used to measure a company's liquidity?  a) Financial…

A: Ratios are the measures that are determined by the entity for the purpose of analyzing the position…

Q: Which of the following statements is not correct? Group of answer choices A)Purchasing fixed assets…

A: A)Purchasing fixed assets using cash decreases the current ratio. Purchasing fixed asset using cash…

Q: ompany can not rely on net income as a valid measure to pay fixed charges

A:

Q: What is Revaluation Reserve? A. Any cost that has not yet been charged to the expense B. The amount…

A: Revaluation reserve is a non-cash reserve created to reflect the true value of the asset when the…

Q: what does it mean a firm has done if CF to creditors is positive vs negative?

A: Cash flow to creditors refers to the net amount of cash generated by a business that is used to…

Q: Under what assumptions market value of a company does not depend on its capital structure

A: One important concept in Modigliani and Miller theorem that market value does not depends on the…

Q: Minimizing liquidity is an excellent way to meet a company's short-term financial obligations. 1)…

A: Liquidity means ability of the company in paying its short term obligations or liabilities.…

Q: Which is the quickest way to determine whether a firm has too much debt?

A: A business is supposed to be overleveraged when it is conveying an excessive amount of debt when…

Q: Explain the two primary reasons that a company’s book value in the balance sheet does not equal its…

A: Balance sheet: This financial statement reports a company’s resources (assets) and claims of…

Q: A company accounts for possible bad debts using the allowance method. When an actual bad debt occurs…

A: Introduction:- A company accounts for possible bad debts using the allowance method. When an actual…

Q: Which of the following circumstances would result in an increase in cash from operations but not an…

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business…

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.