--%>
Assignment Help - homework help

Compare and contrast the book value and liquidation value

Compare and contrast the book value & liquidation value per share for common stock. Is one method more reliable? Describe.
The Book Value of a firm's common stock is found by subtracting the value of the firm's liabilities, and preferred stock, if any, as recorded onto the balance sheet, from the value of its assets. The result is the book value or overall worth of the company's common stock. In order to find the book value per share of common stock, divide the company's book value through the number of dazzling common stock shares.
The liquidation value and book value valuation methods are same, except that the liquidation method employs the market values of the assets and liabilities, not book values. The market values of the assets are the amounts the assets would earn on the open market if they were sold (or liquidated). The market values of liabilities are the amounts of money it would take to pay off the liabilities.
As it is depend on market values, the liquidation value method is more reliable than the book value method. Though, liquidation value is a worst-case valuation assessment. A company's common stock must be worth at least the amount generated per share at liquidation.

   Related Questions in Finance Basics

  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas.

    		•
  • Q : Crowding out influence Normal 0 false

    Normal 0 false false

  • Q : What is Availability Period

    Availability Period: The time period throughout which an appropriation might be encumbered (that is, committed for expenditure), generally specified by the law making the appropriation. When no particular time is given in financial legislation, the pe

    		•
  • Q : Which insurance company takes on the

    Which kind of insurance company usually takes on the greater risks: a life insurance company or a property and casualty insurance company? The risks sheltered against by property and casualty companies are much less predictable than are the risk

    		•
  • Q : Describe the three financial factors

    Normal 0 false false

    		•
  • Q : Define the term floor Floor: The

    Floor: The Assembly or Senate chambers or the word employed to explain the location of a bill or the kind of session. Matters might be termed to as “on the floor”.

    		•
  • Q : Primary requirement for JIT inventory

    Describe the primary requirements for a successful JIT inventory control system? For a JIT system to be successful the supplier has to be willing and capable to deliver materials immediately and the quality of delivered materials has to be high.

    		•
  • Q : Describe the financial leverage effect

    Describe the financial leverage effect and what causes it? Explain the potential benefits and negative consequences of high financial leverage? Financial leverage is the additional volatility of overall income caused through the presence of fix

    		•
  • Q : Modify-open market operations-switching

    Normal 0 false false

    		•
  • Q : What is Enrolled Bill Report Enrolled

    Enrolled Bill Report (EBR): The analysis prepared on Legislative measures passed by both houses and passed on to the Governor, to give the Governor’s Office with information relating to the measure with a recommendation for action by the Governo

    		•