Accumulated retained earnings impact book value

Assignment Help Accounting Basics

Reference no: EM1362734

Explain how accumulated retained earnings impact the book value of a firm's stock.

Say the current market price of this firm's stock on the NYSE is $56.25 per share and the book value of the stock is $45 per share:

1. Give two reasons why the market book share prices might be different. Be specific.

2. If the market for the firm's stock is "efficient," which price (Market or book) is probably a more accurate measure of the true value of the firm's stock? Explain your answer.

3. If you were to form a ratio of market price per share to book price per share for this firm, what kind of information about the firm would this ratio give you (Assume you are thing about investing the firm's stock)?

4. If the firm were to buy back some of its outstanding stock, explain how this action might affect the book value and the market value of the stock.

5. If this firm's market-to-book value ratio was less that 1.00, what this would suggest about the market's assessment of the valuation of the firm going forward.

Reference no: EM1362734

Questions Cloud

Is bridget making utility-maximizing choice : The price of wine is $10 per bottle, and the price of cheese is $4 per pound. The last bottle of wine added 50 units to Bridget's utility, while the last pound of cheese added 40 units. Is Bridget making the utility-maximizing choice.

Create class has constructor to reduce function of fraction : Create a class RationalNumber (fractions) with the following functionality: Has a constructor that prevents a 0 denominator in a fraction and calls the reduce function to simplify the fraction

Purpose of depreciation : Discuss the purpose of depreciation. Does the book value of a fixed asset cost minus accumulated depreciation tell a user what the asset is worth?

Vitamin pills-positive and negative effects : How might taking vitamin pills have both positive and negative effects on your body, based on your diet?

Accumulated retained earnings impact book value : Explain how accumulated retained earnings impact the book value of a firm's stock. Give two reasons why the market book share prices might be different. Be specific.

Prioritizing projects : Companies often prioritize projects in the following four categories: Absolutely essential, Highly necessary, Economically justified, and All other. Provide one example for each category. Why do firms do this type of categorization?

Explain net debt-to-enterprise value ratio for some : Explain Which I have attached which shows the net debt-to-enterprise value ratio for some select industries to answer both parts of the question.

Fitness and nutritional habits : Explain your fitness and nutritional habits. Also, briefly explain some of the health risk associated with obseity.

What is the horizontal distance from the press box : Your cup of coffee is too hot to drink when served at 95.What is mass of an ice cube, taken from a -19.0 freezer, that will cool your coffee to a pleasant 62.

User Account

All Pages