BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Management should attempt to maximize book value of equity
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Book value of equity decreases when retained earnings increase
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Book value of equity reflects investors’ perceptions of the firm’s future.
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Detailed explanation-1: -The book value of a firm’s equity is determined by: Multiplying share price at issue by shares outstanding. The difference between market values of assets and liabilities.
Detailed explanation-2: -Which of the following best describes shareholders’ equity? Equity is the sum of what the initial stockholders paid when they bought company shares and the earnings that the company has retained over the years.
Detailed explanation-3: -Book value per share of common stock of a manufacturing company: reflects the fair value of the company’s stock. is calculated by dividing market value per share by earnings per share.
Detailed explanation-4: -The book value per share (BVPS) metric can be used by investors to gauge whether a stock price is undervalued by comparing it to the firm’s market value per share. If a company’s BVPS is higher than its market value per share-its current stock price-then the stock is considered undervalued.