The following statement was made at a recent company board meeting: “We (the company) did receive...

The following statement was made at a recent company board meeting: “We (the company) did receive a good price for our shares issued at the initial public offering (IPO). Thank heavens we, as directors, do not need to worry about the share price in the future as is the shares are traded on the secondary market.” Do you agree with this statement? Explain.

Expert Solution

Hello

I have a strong disagreement with the statement.

Although, receiving a good price of the share at the IPO is very necessary but the responsibility of management of the company is not just to get the good price of the stake sale to initial investors but the primary objective of management of the company is wealth management, i.e. managing the wealth of the shareholders of the company, which means maximising the market price of the share so as to benefit shareholders of the company and to maintain a steady and/or growing earnings per share.

Hence, it is very much important for the management to look up the management work very sincerely so as to take the company to the new heights and maximizing the market price of the shares of the company in the secondary market, which in turn is the present value of the future benefits from the company.

Hence, the management is wrong in thinking so.

I hope this clears your query.

Do give a thumbs up if you find this helpful.

jeff jeffy answered 2 years ago

At the most recent strategic planning meeting, the board of directors of your company has voted...

At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major expansions for the company in the next five years. The board is considering $5 billion. Take the most recent financial statements and prepare a set of projected financial statements based on the given assumptions. The CEO requests that you prepare a written report (including the financial statements) for her. The company is Starbucks. Generate a...

12) At a recent board of directors meeting of Ascot , Inc., one of the directors...

12) At a recent board of directors meeting of Ascot , Inc., one of the directors expressed concern over the allowance for doubtful accounts appearing on the company's balance sheet. "I don't understand this account," he said. "Why don't we just show accounts receivables at the amount we should receive if we should them to a financial institution and get rid of that allowance account? what the balance sheet presentation of accounts receivable is supposed to show?

During a weekly meeting the CEO of company made an statement that he heard from a...

During a weekly meeting the CEO of company made an statement that he heard from a friend that “There is general agreement that, before it can be regarded as useful in satisfying the needs of various user groups, accounting information should satisfy certain criteria.” You as a chief account of the company is required to explain the to the CEO the key characteristics of Accounting Information with clearly providing example(s) wherever queried for each characteristic.

At a recent board meeting of the Grayson Manufacturing Company, several individuals in attendance expressed concern that they could not understand

Required information [The following information applies to the questions displayed below.] At a recent board meeting of the Grayson Manufacturing Company, several individuals in attendance expressed concern that they could not understand how the choice of an activity level for determining overhead application rates for the company could affect reported operating profits. The controller, Susanna Wu, told members of the board that, in fact, companies have some latitude in how overhead application rates are set. For example, she told members...

Ch. 8 12) At a recent board of directors meeting of Ascot , Inc., one of...

Ch. 8 12) At a recent board of directors meeting of Ascot , Inc., one of the directors expressed concern over the allowance for doubtful accounts appearing on the company's balance sheet. "I don't understand this account," he said. "Why don't we just show accounts receivables at the amount we should receive if we should them to a financial institution and get rid of that allowance account?" Prepare a written response to the director. Include in your response (1) an...

At a recent board of directors meeting of Bismark Corp., one of the directors expressed concern...

At a recent board of directors meeting of Bismark Corp., one of the directors expressed concern over the allowance for uncollectible accounts appearing in the company's balance sheet. ldon' t understand this account," he said. Why don't we just show accounts receivable at the amount owed to us and get rid of that allowance? Respond to the director s question; include in your response? (a) an explanation of why the company has an allowance account (c) how accrual accounting (as...

1. a recent news broadcast made the following statement : "an increase in the price of...

1. a recent news broadcast made the following statement : "an increase in the price of coffee has caused a decrease in the demand of coffee". Would an economist agree with this statement? (carefully look at the wording.) a)yes, an economist would agree with this statement b) no, an economist would not agree 2. A price ceiling causes the actual number of units of a good bought and sold to decrease compared to the equilibrium quantity. A price floor causes...

Karim is the president of Samirad Company. At a meeting of the board of directors, Karim...

Karim is the president of Samirad Company. At a meeting of the board of directors, Karim was asked to explain why audits of the company are made by (1) internal auditors (2) independent auditors, and (3) government auditors. One board member suggested that the company's total audit expense might be less if all auditing was done by internal auditors. Karim was unable to distinguish between the three types of auditors or to satisfactorily respond to the board member's suggestion. Instructions:...

27.A recent news broadcast made the following statement: “Anincrease in the price of coffee...

27.A recent news broadcast made the following statement: “An increase in the price of coffee has caused a decrease in the demand for coffee.” Would an economist agree with this statement? (Carefully look at the wording.)Group of answer choicesNo, an economist would not agree with this statement.Yes, an economist would agree with this statement.28.In which of the following cases will a firm’s total revenue decrease? There is more than one correct answer to this question. You must mark all of...

In a recent news report, the following statement was made: "A report put out by brokerage...

In a recent news report, the following statement was made: "A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF (fuel) prices has brought down the load factors (flight occupancy) required for the airlines to break even from 78 percent to 63 percent." The load factor is the percentage of available seats on a flight that are occupied. Questions What are some important assumptions commonly made in CVP analysis? What significant assumptions and...

Question