Foundations of Financial Management with Time Value of Money card 14e Stanley Block SOLUTIONS MANUAL test bank
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Foundations of Financial Management 14e Block Test Bank
Foundations of
Financial Management with Time Value of Money card 14e Stanley Block SOLUTIONS
MANUAL
block - foundations of financial management - 14e, test bank SOLUTIONS MANUAL 0073530727
Block - Foundations
of Financial Management - 15e, TEST BANK 0077861612
Chapter 2
Review
of Accounting
Discussion Questions
2-1.
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Discuss some financial variables that
affect the price-earnings ratio.
The price-earnings ratio will be
influenced by the earnings and sales growth of the firm, the risk or
volatility in performance, the debt-equity structure of the firm, the
dividend payment policy, the quality of management, and a number of other
factors. The ratio tends to be future-oriented, and the more positive the
outlook, the higher it will be.
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2-2.
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What is the difference between book value
per share of common stock and market value per share? Why does this disparity
occur?
Book value per share is arrived at by
taking the cost of the assets and subtracting out liabilities and preferred
stock and dividing by the number of common shares outstanding. It is based on
the historical cost of the assets. Market value per share is based on current
assessed value of the firm in the marketplace and may bear little
relationship to original cost. Besides the disparity between book and market
value caused by the historical cost approach, other contributing factors are
the growth prospects for the firm, the quality of management, and the
industry outlook. To the extent these are quite negative or positive; market
value may differ widely from book value.
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