Was your hypothesis correct? Explain why or why not.

A firm has current assets that could be sold for their book value of $32 million. The book value of its fixed assets is $70 mill

pickupchik [31]

Answer:

Market value of equity / book value of equity 72/52 = 1.38

The company is a little overvalued.

It means that the assets they have because the rate is declining, have a higher yield than the market, that's why their market value increase, therefore the investor will pay more to acquire the company or shares of the company because their profits will be above the common of the industry.

Explanation:

concept book value market value diference

current assets 32 millons 32 millons 0

long term assets 70 millons 100 millons +30,000,000

liabilities 50 millons 60 millons -10,000,000

TOTALS 70+32 - 50= 52 32+100-60=72 +20,000,000

Market value of equity / book value of equity 72/52 = 1.38

This ratio tries to determinate if a company is being undervalued or overvalued.

It is usually good to help a third party at the task of determinate whether or not a company's market value is suffering from speculation (when extremely overvalued)

When the ratio is below 1 It will mean that it is undervalued. The manager may interpret this that third parties see the company cheap while trading.

When it is above 1, it is overvalued, this means an investor will pay more for a portion of the company than it really has. This can lead to thinking that forecast profit is rising and because of that the investors are paying a premium. But if it gets really high, then it is saying that the company is subject to speculation and the price bubble may explode anytime.

7 0

3 years ago

What role do businesses play in a free enterprise system?

fenix001 [56]

Answer:

C. They produce most available goods and services.

Explanation:

In A free market economy, the production of goods and services is done by the private sector. The government's participation in economic activities is limited. The private sector owns and controls the majority of the factors of production. The private sector owns factories, manufacturing, and other businesses in the economy.

In the free market economy, profits are the primary motivating factors to engage in business. The private sector produces goods and services that will generate profits for the businesses.

3 0

3 years ago

As compared to the national average, a Texas family in the lowest 20 percent of income pays ______ of their income in taxes.

Ghella [55]

In Texas, a family in the lowest 20% of income will, in a manner different from the national average, pay more of their income.

<h3>Why would they pay more?</h3>

Texas operates a regressive taxation system which means that the richer you are, the less percentage tax you pay.

This means that the poorer families have to pay a higher percentage than others. This is different from much of the U.S. where the poor pay less.

In conclusion, they pay more of their income.

Find out more on regressive tax at brainly.com/question/2214317.

5 0

3 years ago

Ullrich Printing Inc. paid out $21,750 of common dividends during the year. It ended the year with $187,500 of retained earnings

raketka [301]

Answer:

The options are :

$77,000 $80,850 $84,893 $89,137 $93,594

The correct option is the first one ,$77,000

Explanation:

The net income can be ascertained using the ending retained earnings formula provided thus:

ending retained earnings=beginning retained earnings+net income-dividends

ending retained earnings is $187,500

beginning retained earnings is $132,250

dividends paid during the year was $21,750

By changing the subject of the formula,net income formula is derived:

net income=ending retained earnings-beginning retained earnings+dividends

net income=$187,500-$132,250+$21,750=$ 77,000.00

6 0

4 years ago

You are most concerned for the infant who has

Gelneren [198K]

A i think, did btec childcare

8 0

3 years ago

Was your hypothesis correct? Explain why or why not.​

Was your hypothesis correct? Explain why or why not.