Explain about book value weights, Financial Management

Assignment Help:

Q. Explain about Book Value Weights?

Book Value Weights: - Book value weights are calculating form the values taken from the balance sheet. The weight to be assigned to every source of finance is the book value of that source of finance divided by the book value of total sources of finance.

Benefits of Book Value Weights:

  • Book values are readily obtainable from the published records pf the firm.
  • Book value weights are more realistic for the reason that the firms set their capital structure targets in terms of book values rather than market values.
  • Book value weights aren't affected by the fluctuations in the capital market.
  • In the circumstances of those companies whose securities aren't listed only book value weights can be used.

Drawbacks of Book Value Weights:-

  • The costs of different sources of finance are calculated using prevailing market prices. Hence weights must also be assigned according to market values.
  • The present economic values of different sources of capital may be totally different from their book values.

Related Discussions:- Explain about book value weights

What to do to maximise profits of the company, What to do to maximise profi...

What to do to maximise profits of the company If you want to maximise profits, there are only two methods to do it. Either you decrease your expenses (also known as costs) or y

Financial statements for a company, The following is incomplete financial s...

The following is incomplete financial statements for XYZ, Inc.:                                                     XYZ, Inc.

Portfolio management and asset pricing, I am facing some problems in my ass...

I am facing some problems in my assignment of Portfolio Management. Can anybody suggest me the proper explanation for it?

"a" round financing, "A" Round Financing "A" Round Financing is the fir...

"A" Round Financing "A" Round Financing is the first main round of business financing through private equity investors or venture capitalists. In private equity investing, an "

Volatility risk, Expected volatility is a major factor that affects t...

Expected volatility is a major factor that affects the value of an option. Expected volatility of an option on bond is referred to as 'expected yield volatility'. The

Savings, This is the part of after-tax personal income that is not spent.

This is the part of after-tax personal income that is not spent.

Formation of board of amc and restrictions on directors, Formation of Board...

Formation of Board of AMC and Restrictions on Directors Having regard to the significant role of the Board of Directors of the AMC in rendering the company's operations efficie

Investment objectives, Investment Objectives: Any investment should alw...

Investment Objectives: Any investment should always start with identifying its objective. Thus, the first step in the pension fund investment management system is defining the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd