Item 1 of 30Book value per common share represents the amount of shareholders' equity assigned to each outstanding share of common stock.Which one of the following statements about book value per common share is correct?Select the correct response:Book value per common share can be misleading because it is based on historical cost.Market price per common share usually approximates book value per common share.A market price per common share that is greater than book value per common share is an indication of an overvaluedstock.Book value per common share is the amount that would be paid to shareholders if the company were sold to anothercompany.

Common shares the ordinary shares that are being issued by the company, on which dividends needs to…

Answered: Item 1 of 30 Book value per common…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which one of the following statements is correct concerning both the dollar return and the percentage return on a share investment? a. The dollar return is dependent on the size of the investment while the percentage return is not. b. The dollar return is more accurate than the percentage return because the dollar return includes dividend income while the percentage return does not. c. The dollar return considers the time value of money while the percentage return does not. d. Dollar returns are based on capital gains while percentage returns are based on the total rate of return. Clear my choice
The market-to-book ratio is the ratio of a firm that reports negative retained earnings on its equity statement is less than one (i.e, market value of equity is less than book value of equity) True OR False
Earnings per share is a profitability ratio measuring how much a furm earns per share of common stock outstanding. True False
Which statement best describes a possible result of treasury shares transactions? * May increase but not decrease retained earnings May increase net income if the cost method is used May decrease but not increase retained earnings The excess of original issuance price over the retirement cost is * Debited to retained earnings Credited to Share Premium - Retirement Debited to Share Premium - Treasury Shares and then Retained earnings None of the above
What is par value? Select one: a. The price at which a company's stock is sold b. The dollar amount credited to capital stock when issued c. The lowest price at which a company's stock may be issued d. The highest price at which a company's stock may be issued
Which of the following statements is false regarding diluted earnings per share? Reporting diluted earnings per share is required by GAAP when potentially significant dilution of EPS exists. Diluted earnings per share can be used to reflect the extent of potential share dilution. Diluted earnings per share is not reported by some companies. Diluted earnings per share is always the same as basic earnings per share.
QUESTION 11 Which of the following statements is true? O A. The DuPont Identity is used to calculate Return on Assets. O B. A company can imporve their P/E ratio by improving their EPS. OC.A Market to Book ratio greater than 1 always means the stock is undervalued. O D. All of the statements are false.
True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. False: Flotation costs are additional costs associated with raising new common stock. True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated Alpha Moose Transporters is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $550,000. The rate of return that Alpha Moose expects to earn on its project (net of its flotation costs) is (rounded to two decimal places) Sunny Day Manufacturing Company has a current stock price of…
Net income, less preferred dividends, divided by the average total number of outstanding shares is the: Group of answer choices A6Return on equity ratio b)Earnings per share c)Book value per share d)Profit margin e)None of the above
Which of the following is not true with regard to the relationship between R&D expenses and the value of the company’s stock shares, as perceived by investors and analysts? Multiple Choice: A.There is no evidence that R&D expenses represent value-relevant information to investors. B. There is a causal relationship between R&D expenditures and future financial benefits. C. A $1 increase in R&D expenditures leads to a $5 increase in the market value of the company’s stock shares. D. Analysts adjust estimates of unrecorded R&D assets which are then used to adjust reported earnings and book values.
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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